The holidays are long gone and now you’re starting to get nervous that you’re not as prepared as you thought to handle the bills pouring in. Maybe you’ve started thinking you’re going to need some fast cash to make ends meet. Many people do not realize there is an alterative to pawn shops. When considering short terms loans or pawn shops, you need to know the facts.
What are you giving up when you “pawn” your cherished items to a pawn shop? We say cherished because contrary to popular belief, these shops are only looking for the highest value items that they can give you the least amount of money for. You might be shocked if you’ve set foot in one before. The goal of these stores is for you to never return to pay off the debt. Here are some examples of the most popular items pawn shops want:
- jewelry/gold/precious metals
- sports equipment
- yard tools & equipment
- musical instruments
The most payout you’ll see from a pawn shop is 60% of the current item value.There is also an option to outright sell your possessions in most of the shops.
Another main cash loan option would be ring brokers, but these companies operate in very much the same way as pawn shops and don’t really give you much of an extra payment for your possessions.
A personal loan actually gives you a chance to increase your credit rating, as the credit bureaus record your payments. Most do not require collateral, either, which means you’re not putting a personal possession at risk.
You will have to get through a few boundaries to get the personal loan: your income will be taken into account, your employer may be called, and your credit will be run. All of these results will be analyzed to decide the amount the company can safely loan you.
Loan vs. Pawn
Now that you’ve got the facts simply laid out, all you need to is compare the pros and cons and make sure you do what’s right for you and your family. Is a credit rating increase important to you? Are you willing to ultimately give up your possessions if you can’t make payments on time?
Personal loans have become very popular; if you’re looking for options for short term loans make sure to do your due diligence and shop around for rates before committing.