Sometimes you just need to borrow a little bit of money without needing to take out a substantial multi-year-long loan. Both pawn loans and payday loans are available for you to get what you need, but one of these options is likely to leave you in a worse situation than before. Rather than falling into the endless money pit that is a payday loan, you may want to scrounge around the house for something that you can offer as collateral for a pawn loan instead.
What is a PayDay Loan?
If you’re looking for quick cash, someone could have told you to look into a payday loan that uses your next paycheck as assurance. While you can certainly borrow a good handful of money with a payday loan, it comes with a great deal of setbacks that could leave you feeling as though you’ve been scammed. Ridiculously high interest rates, unreasonably short deadlines, and damage to your credit are all very debilitating reasons as to why people resent ever agreeing to take out a payday loan in the first place.
Are PayDay Loans Legitimate?
You would think that payday loans should be illegal due to their unrealistic demands. In many states, they actually are illegal. Georgia, North Carolina, Arizona, and Arkansas are just a few of the states that actively prohibit payday loans to take place because of their likelihood of driving people into an endless loop of debt that they can’t bounce back from. For many states that do allow payday loans, interest rate boundaries are set in place in an effort to be easy on the borrower. However, there are some locations that still need to work on their legislations as payday lenders can charge as high as 664% from not being held back by limitations.
How Are Pawn Loans Better?
While payday loans are notorious for having completely unreasonable terms, pawn loans are a much more convenient and forgiving way of borrowing a small amount of cash. Just by bringing a piece of jewelry down to your local pawn shop, you could benefit in so many different ways.
Fairer Interest Rates
Perhaps the biggest complaint having to do with payday loans is the higher-than-average interest rate that comes with every term. Pawn loans already offer much lower rates, and depending on the broker, they may work with you according to your personal situation.
No Income Check Involved
Payday loan lenders typically base your interest rate on your income which makes the terms biased in their favor. And even though payday loan lenders don’t typically pull from your credit score on signup, missing a payment could still cause your score to take a big hit. Pawn loans are not tied to your credit report at all, so you never have to worry about the possibility of your financial health being in danger. If you are unable to pay your loan for any reason, the pawn shop will simply keep the item that you handed over as collateral.
Since there is a lot of math involved with payday loans from evaluating your income and adjusting interest fees to the maximum amount you’re able to pay, the signup process could take an entire day to finalize. Pawn loans are as simple as presenting your item, agreeing to a price, and taking the cash. You could be in and out in a matter of minutes.
Flexible Payoff Dates
If unfair interest rates weren’t enough, payday loans also come with unreasonable deadlines for paying off your high-cost loan. Your set payoff date could be as soon as just two weeks from the time of the loan’s agreement. The excuse for this is that payday loans are meant to be taken from your next paycheck. This can be referred to as a post-dated check which ensures that the lender gets paid. There are pawn shops that offer much longer terms, sometimes even over the course of four months in order to give you plenty of time to pay back your loan stress-free with no risk.
Tips for Getting a Pawn Loan
Taking out a pawn loan is clearly the most logical option for borrowing a small sum of money. What can you do to ensure that things go smoothly? Familiarize yourself with the pawning process and what you can do to capitalize on your collateral item’s worth.
1. Gather everything you need
Even after you’ve decided on a designer watch or other piece of jewelry to use for your collateral, keep looking around for packaging, tools, accessories, or paperwork that originally came with the item. The more you make it look complete and somewhat new, the higher the value.
2. Clean your item
Revitalizing the shine that your jewelry had when you first bought it is key to getting the best value. There are different cleaning methods for each type of metal, so be careful with what you use. If you think from the pawnbroker’s perspective, you wouldn’t be able to help but want to pay more for a shiny necklace over a dull, rusty one.
3. Research the value of your item
You should always have an idea of what your item is worth in order to prevent brokers from shorting you. This can be done with a bit of online research such as looking up current gold prices or by finding the closest version of your item on a classifieds listing. But since you’ll be taking your item to a pawn shop, some of them even keep an updated inventory of their goods which you can use as a more accurate reference.
4. Negotiate at the pawn shop
It’s good to remember that pawn shops expect you to negotiate their prices, so never feel discouraged from asking for what you believe to be fair. This is where your research comes in. If the pawnbroker refuses to meet a good compromise, don’t settle for less. You can always go to another pawn shop for a better deal. However, it’s also good to keep your expectations reasonable so that you can find a decent deal sooner than later.
That’s really all there is to it! The pawnbroker will take your item, give you your cash, and wait for their payment. A good pawn shop will be open to extensions or multiple loans, all without affecting your credit in the slightest since pawn loans are only tied to the collateral item.
Where to Find a Good Pawn Shop in Azusa
If you live in the Azusa area, including Baldwin Park and La Puente, Azusa Pawn is the best pawn shop for pawn loans. Interest rates as low as 2% and loan periods as long as four months is why locals love to rely on Azusa Pawn for on-the-spot loans and quick cash. Stop by for a visit at 1028 West Gladstone Street or call (626) 334-2274 for more information.