You probably know that pawn shops buy and sell all kinds of things, from guns to instruments to electronics. You might not know that pawn shops also offer personal loans. Getting a personal loan from a pawn shop is different from most other loan types, and here are several things to understand about these loans.
What You Need for a Personal Loan from a Pawn Shop
People seek personal loans from pawn shops for several common reasons. First, some people have bad credit and cannot access other loan types. Using a personal loan from a pawn shop generally does not require a credit check, making it the ideal loan type for a person with bad credit. Secondly, pawn shop personal loans offer a fast way to borrow some money when you need it.
To get a personal loan from a pawn shop, you will need just a few things. First, you must have proof of identity. You cannot borrow money without proving who you are. Secondly, you need to provide something valuable to the pawn shop as collateral. You can use just about anything you own, as long as it is worth some money. Finally, you must sign a contract with the shop to complete the loan.
How the Loan Works
Personal loans from pawn shops generally require lump-sum payments on their due dates. Some pawn shops might provide installment loans, but most do not. When you take out the loan, you receive the proceeds. You must then visit the pawn shop by the due date with the cash you owe them for the loan. If you do this, they will give you your valuable item back, and this settles the loan.
Your Responsibility With the Loan
The main responsibility you have is paying back the loan by the due date. If you cannot do this, you can work out a different arrangement with the pawn shop if you want to repay the loan at a later point.
Failing to pay the loan off by its due date might result in losing your collateral. If you fail to repay the loan, the pawn shop settles the loan by keeping your collateral. In other words, you will not owe any money to the pawn shop if you decide to handle the loan by not paying it off.
To learn more about the services that pawn shops can provide, contact a company like Wimpey's Pawn Shop.