Pawnshop Loans, How They Work
Pawnshop Loans: Pawnshop loans are just one of the many financial services offered by H&T and continue to be popular with both new and returning customers. Pawnbroking is known as the oldest form of borrowing, with evidence of its use dating back over 3,000 years. It’s a simple idea that works well, and that is why it has stood the test of time.
If anyone is thinking about applying for a pawn shop loan, he/she should want to know exactly how they work. Here, we’ll walk you through all of the basics, and you can also get in touch if you have any questions or concerns.
What Is A Pawnshop Loans?
Before borrowing, one must understand the definition of a pawn loan. If one takes out a pawn loan, he/she is borrowing money that’s secured against an item that they own. As a result, if one fails to meet the agreed repayments, the lender will be able to seize his/her item — also termed as collateral — to recover their losses. They offer pawn shop loans and high-end pawn loans that one will be able to secure against a range of items, such as cars, jewelry, or watches. As long as one has items that could cover the cost, one can take out a secured loan of up to £1 million with them.
If one would like more information that will help to decide whether a pawnbroking loan is the right choice for him/her, check out the guide to the difference between secured and unsecured loans.
Advantages Of Pawnshop Loans
There are some reasons why one might decide to opt for pawnshop loans rather than an unsecured personal loan or any other loan. Here are some of the advantages of these loans following:
Lower interest rates: Because secured loans give lenders an extra level of protection, as they can seize borrowers items that are provided as collateral if they fail to repay the loan, the interest rates tend to be significantly lower than applicants will find with unsecured loans.
Easier to get: If one is wondering how a loan is obtained through a pawn shop, he/she will be pleased to hear it’s typically much easier than when he/she is trying to take out an unsecured loan. Because his/her collateral gives lenders some extra protection, they’ll often be willing to lend to him, even if the credit score isn’t the strongest. If this has been a hindrance for borrowers in the past, a pawn loan could make the perfect and accurate solution.
Borrow larger amounts: Thanks to the extra layer of protection, lenders will also generally allow one to borrow more than with an unsecured loan. However, one does need to remember that the items he/she secures his/her loan against must match or exceed the value, as these will be used to cover the cost if one can’t make his/her repayments.
Also Read: Secured Loans In UK, How To Get This One
How Long Is This Loan Term?
When one takes out a pawn loan, he/she will agree on the duration with a lender, and this can differ from company to company. Pawn loans at H&T last for up to five to six months and one is welcome to pay weekly, monthly, or in one lump sum at the end of the given term. Loans may be paid off sooner, as charge daily interest, borrowers will only get charged interest for the time have the loan.
Can One Extend A Pawnshop Loan?
If one is unable to pay back the pawn loan within the agreed repayment period, the lender may be willing to extend the term of the loan, although this will typically be termed on a case-by-case basis. If one is in this situation, contact the lender or store as soon as possible to ask about his/her options and come to an agreement that works for both of them.
What Is The Interest On This Loan?
The interest that one is charged in addition to the pawn loan amount is dependent on the value of the loan itself. The pawn loan interest rates are as follows:
| Amount of loan | Monthly Interest rate | Daily Interest rate |
| £10 – £1,500 | 10.49% | 0.34% |
| £1,501 – £3,500 | 9.49% | 0.31% |
| £3,501 – £5,000 | 9.00% | 0.30% |
| £5,001 – £7,500 | 8.00% | 0.26% |
| £7,501 – £10,000 | 7.00% | 0.23% |
| £10,001 – £15,000 | 6.00% | 0.20% |
| £15,001 – £50,000 | 5.00% | 0.16% |
| £50,000+ | 4.00% | 0.13% |
Representative Example of this loan: Total amount of credit is: £200 for 5 months. The total amount to pay in one installment: is £325.88. The total charge for this credit is £125.88(Interest rate Only).
What Do One Need To Apply For A Pawn Loan?
So, how one can obtain a loan through a pawn shop or online pawnbroker? To apply for a pawn loan today, one needs to be 18 years old or over and a UK resident. He/she also needs an item or items of valuable amount to put up as collateral for the loan. The money is lent to him against the value of his item(s) and the pawnbroker keeps his valuables in a safe place for the duration of the loan term. Once the loan has been paid back in satisfaction (including any agreed interest), the item is returned to him.
Should one fail to pay the loan in full and on a given time, the pawnbroker then becomes the legal owner of the item(s) and can sell these items to ensure they are not out of pocket. If one is worried he/she might not be able to make the repayments on time, contact the lender immediately to ask about an extension. The value one uses to borrow money becomes the security for the loan itself. This is why one must be the legal owner of the item(s) and why he/she should be confident in his/her ability to repay the loan amount before signing on the dotted line.
What Can One Pawn?
If one is looking to secure a pawn loan against one or more items, he/she must be the legal owner of these items. The valuables he/she can use to put up for a pawn loan include almost anything of value, such as:
- Gold, silver, or platinum items, including jewelry
- Diamonds
- Gemstone jewellery
- Luxury and branded watches
- Designer handbags
- Art and antiques
- Cars and other vehicles