Pawnshops have a bad reputation. Some of it is earned but some is just fabricated nonsense. You may have heard that pawn brokers are the last resort, the only people who will buy what you have to sell with no judgement. Most pawn brokers aren’t as sketchy as you may think. Most of them are small business enterprises who are not in the business of buying rare collectible goods like the reality TV’s Pawn Stars would have you believe.
Instead Pawn shops are unglamorous, no frills attached and useful businesses that allow people to loan small but reasonable amounts of money against gold jewellery and other valuable things – typically $150-$500. Millions of people are served each year. That is why there are so many of them lining up strip malls with blinking lights that say “We Buy Gold.” If you have never been in a pawn shop, there are three key things you need to know.
- Pawn shops are serious business
There are thousands of pawnbrokers across Australia and millions of Australians rely on them to get quick cash. People can use their valuables as collateral to get a short term loan from a pawn broker.
Pawn shops provide short-term loans to customers with collateral. Getting a loan from a pawn shop is straightforward. You bring your item to a pawn shop Brisbane. The pawnbroker will look at the item. If he thinks he can eventually sell the item, he will offer to loan you a fraction of the value of the item. When you accept the offer, you will get cash on the spot. You will have a set time between one to four months to pay back the loan. If you can’t pay the loan back within the that specified period, you lose the pawned item and the pawnbroker will sell the item for a profit.
- Pawn shops offer a financial lifeline
Pawnshops are used by people from all walks of life however they are particularly popular amongst people who aren’t part of the financial mainstream. There are Hundreds of thousands of people who are unbanned in Australia and these people rely on services like rent-to-own businesses, payday loan, check cashing for their financial transactions. These people also rely on pawnshops for cash. Pawn shop Brisbane loans are attractive to a lot of underbanked people because there are no credit checks and the debt low risk. If you can’t pay the loan back you won’t get a mark on your credit report.
- Pawn shops aren’t scary places as most people think
Pawnshops aren’t seedy, dark places run by creepy looking pawn brokers. Not everyone who pawn their goods is desperate either. Some people use pawn shops to sell things they no longer need. Pawn brokers have since changed their image in the last couple of years.
The idea that pawn brokers accept items that have a dubious origin is also not true. There are people who try to pawn items that might be stolen, but legitimate pawn brokers require ID and work within the laws of the country to ensure they aren’t perpetuating crime by selling stolen goods.
- Pawnbrokers don’t Try to Keep Items
Contrary to popular belief pawnshops aren’t out to keep your pawned items. It is in their interest for you to pay off the loan on time. If you return for your stuff chances are you might return again to pawn it back. Pawnshops make money from the interest they get on the loan not on keeping customer’s items.
- They don’t Charge Astronomical Interest Rates
The pawn industry has had a bad rep because of shaddy lenders who charge more interest than what is reasonable for a loan. The truth is, a pawn shop loan is a short term loan that’s usually given for a small amount of money, there is no need for setting astronomical fees to offset the risk of the loan not being repaid. After all, the pawned item is forfeited should the customer fail to meet their payment terms and obligations. If you compared the interest rates by other lenders who offer similar, small, short term loans like payday lenders; you will realise that pawnshop rates are quite reasonable.
- The Pawn broking Industry Is Highly Regulated
Pawn shops aren’t just running their business any way they want. The industry is highly regulates. They require licenses to operate. They need to do security checks to ensure that they aren’t accepting stolen merchandise. Financial transactions are also monitored the same way the do in the banking industry.