If you have sudden expenses or no longer have income, you may need to look into getting a loan to help handle medical expenses, rent, or other payments. There are a variety of options for getting a loan from pawning items at a pawn shop, to getting a payday or personal loan. In this article, we will define different types of loans and go over their benefits and drawbacks. If you have any questions about pawn loans or live in the NYC area and are interested in setting up a pawn loan, please contact our team.
What Options Are There For Getting A Loan
When you need cash to cover an expense you have a few different options on how to get that money.
Pawn Shop Loan: A pawn loan works by using an item as collateral. The item is evaluated by the pawn shop and a percentage of its’ resale value is given as a loan. The loan + interest needs to be paid off in order to recover the item. The key benefit of pawn loans is that the money received is based on the value of the item and not based on credit score or your paycheck. However, the drawback is that you do need to have items of value in order for a pawn loan to work for you.
Payday Loan: A payday loan is a small amount of money that is lent to you with the understanding that you will be able to pay it back after you receive your next paycheck. This is a loan built around needing quick cash between pay stubs to cover a sudden or immediate expense. Of course, they are not right for everyone. First and foremost, these loans usually have high interest rates to make them worthwhile for the loaner. They are also often very limited and less than what you would get from a single paycheck, so they might not be what you need.
Personal Loan: A personal loan is a broad definition for a loan that comes from either someone you know or another lender. Personal loans are offered by credit unions, banks, and other lenders. The loan doesn’t necessarily have a limit on how much can be provided, but is often based on your credit score. A secured loan requires collateral to borrow the money, where an unsecured loan does not. Interest rates and the amount of money you can get vary greatly based on the lender you are working with and your own financial history.
Benefits Of Pawn Loans:
Timeline: Pawn loans are immediate, you can get cash very quickly and get a payment plan that works for you.
Flexibility: Many pawn shops pride themselves on their ability to work with their clients. A good pawn shop works with clients to make sure they have the tools they need to effectively pay off their loan.
Long-Term Effects: Many people choose pawn loans because they have no impact on your financial history. The loan amount and interest rate are not determined using your finances, and the loan will not impact your financial future by changing your credit score.
Drawbacks Of Pawn Loans:
Collateral: Pawn loans require you to have an item or items to put up. If you don’t have something valuable enough for the loan you need, this might not be a viable strategy.
Potential Loss: If a pawn loan cannot be paid off, the pawn shop might be able to keep the item you used and resell it to make their money back from providing you a loan. Most pawn shops will be overly communicative on timeline and whether or not they can provide extensions.
Get Pawn Loans in New York City
If you live in and around New York City and are interested in learning more about the pawn loan process, please contact us. Our team would be happy to discuss how pawn loans work or setup a loan for you.
