When you want to raise cash fast, but do not want to opt for a conventional loan and deal with credit checks, you can always turn to a pawnbroker. Pawnbrokers can help you to solve any short-term financial needs, providing you with the money you need quickly.
When you approach a pawnbroker in London or any other big city, you are usually left with two choices:
One, you keep anything valuable like a luxury watch or a diamond ring as collateral for a loan.
Second, you sell your luxury asset to the pawnbroker.
Today, this article will help you to understand what pawnbrokers are and how they work as well as what you can expect while heading to a pawn shop.
Who are Pawnbrokers?
A pawnbroker is an individual who lends money based on the value of the luxury asset you leave as collateral. Unlike a bank or any other traditional lending institutions, a pawnbroker neither checks a customer’s credit score nor any other aspects like income before approving a loan.
When you hand over your asset to a pawnbroker, he/she will assess it and offer you a loan according to the item’s actual value. This is one of the significant factors that make pawnbrokers a convenient option especially for people with poor or bad credit scores or past disparaging marks on their records.
If a customer wishes to go ahead with the transaction, the pawnbroker provides a credit agreement to sign that clearly outlines the amount he/she has borrowed and what the repayments are. The customer also acquires as a part of the deal itself a pledge receipt. The maximum loan tenure is usually for a period of six to seven months.
And, want to know the best part?
You are entitled to reclaim your asset at any time within the loan period by simply paying off the original loan amount and the interest due.
Once your contract expires, the pawnbroker will give you time to come in and retrieve your item. Customers are usually offered 14 days cooling off time within which they have to draw out the agreement and pay only the interest for the loan period.
But if you cannot redeem your item repaying the full amount owed by the end of your contract, the pawnbroker can do two things:
One, he/she may sell your collateral for recovering the cash or debt.
Second, the pawnbroker may help you to renew your loan. You will obtain a new contract along with an additional seven months to pay back, by only repaying the interest of your original loan term.
If you want to get a loan against your luxury watch or loan against a diamond ring, you should always choose a pawnbroker who is a member of the National Pawnbrokers’ Association. However, all pawnbrokers are now heavily regulated and required to obtain a license to trade from the Financial Conduct Authority.
How does pawnbroking work?
When you visit a pawn shop to get a loan or to sell your luxury asset for cash, the pawnbroker will look at your item closely and determine its value based on its current market price and its overall condition. A pawnbroker inspects nearly everything as long as an asset has some monetary value.
Once the pawnbroker assesses the asset and determines its value, he/she will provide you with a cash loan for a particular term. Although there is no minimum period for a loan contract, the maximum tenure is usually six to seven months. A pawnbroker charges an interest rate that may be more than a high street bank, but generally, it is a lot less in comparison to a payday loan.
What’s the bottom line?
You have to pay the full loan amount along with the interest rate that was agreed upon by the end of your loan term. Or, the asset you placed as pledge will become the pawn shop’s property, and they may sell it at their choice. In instances, when you are unable to redeem your asset after your contract period ends, the pawnbroker may agree to extend your loan term, drawing up a new agreement. They will expect you only to pay back the interest that you owe.
What Items Can I Pawn?
For many people, pawnbroking is the easiest way to obtain quick money. A pawnbroker uses a precious item as collateral for a loan or buys assets. However, people who are interested in securing a pawn loan wonder:
‘What can I pawn?’ or ‘What items a pawnbroker accepts as a pledge for a loan?’
Although the items accepted as collateral vary from shop to shop, some assets are considered worldwide. A pawnbroker takes anything that he/she will be able to sell.
While jewellery is one of the most famous items to pawn, people also pledge assets such as luxury watches, precious metals, loose diamonds and other precious gemstones and even gold coins. Diamonds, gold jewellery and expensive watches like Rolex, Omega and Cartier are always desirable at high street pawn shops.
How Many Items Can I pawn at a time?
You can decide to pawn more than one item or as many items as you want, at a time. You can redeem each pawned item on its own, or also with other pledge items by paying off the relevant interest along with the loan amounts.
Benefits of Pawnbroking: Highlights
• A trustworthy local pawnbroker offers customers a fast, confidential and secure way to borrow money.
• Unlike any other traditional or high street lender, you can approach a pawnbroker to raise cash, even if you have a bad credit history. A pawnbroker does not carry out any credit checks
• If you are satisfied with the valuation offered by a pawnbroker and decide to go ahead with the transaction, you will acquire your money on the same day in less than no time
• As with any other collateral loan at a pawn shop, you have the right to reclaim your asset at any time within your loan period
• If the loan is not repaid, the pawnbroker can help you to extend your loan time, without hurting your credit history.