Due to the economic downturn, business owners and families are coming to pawn shops for loans to cover unexpected needs. Every day, thousands of people need small, short-term loans that they can’t get from traditional sources. With the success of Pawn Shop shows on TV, many are finding that modern shops are reputable businesses-;but they may not be sure how the pawn process works. For those looking for a loan from a reliable pawnbroker, here is some information on pawn shops.
- What do pawn shops do? The store’s business is collateral lending. They offer loans, with an asset as security. A
- Pawn Shop in Chicago
- may also do retail sales, but their main focus is on lending.
- How do loans work? A customer brings in a valuable item, and the broker offers the loan based on a portion of the item’s value. The broker retains the item until the loan is repaid with fees and interest. Pawn shops are regulated by local, state and federal governing bodies.
- How much money can be obtained? Customers typically only get a percentage of the value of the item. Pawnbrokers must pay for security and storage, along with the item’s resale value if the loan isn’t paid back. The average loan is about $150, but they can be for other amounts.
- What are interest rates like? These rates vary from one state to another, and are usually less than reconnect and overdraft fees or the late fees on credit cards.
- How does someone get a loan? To get a loan from a pawn shop in Chicago, all that’s needed is proper ID and a valuable item. Pawn loans don’t require credit checks, cosigners or a bank account.
- What will happen if the loan isn’t repaid? Defaulting on a pawn loan doesn’t affect the borrower’s credit score. Because loans are secured by collateral, the loan is paid off when the Pawn Shop in Chicago takes possession of the item.
For many years, pawn shops have provided loans to those who encounter unexpected financial needs. These important, low-value loans aren’t offered by traditional lenders, and they are easily obtainable by those with poor credit and a checkered financial past.
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