Local pawn shop loans are a type of secured short-term loan that lets you borrow cash in exchange for an item of value. Typical items people bring into their local pawn shop include jewelry, electronics, and even art and cars. Pawnshops have been featured on reality TV and are a great resource for individuals with immediate financial needs that cannot be addressed by traditional means such as credit cards or personal loans.
Pawn shops are regulated at the state level and each has its own rules and regulations that must be followed. In general, you must bring in a valuable item of some sort and agree to pay back the loan within a certain period of time, usually 30 to 60 days along with any fees and interest incurred. If you are unable to pay the loan back, the pawnshop has the right to sell the item in order to recover the money borrowed.
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In the end, most people do pay their pawn shop loans and get their item back. However, if you are not able to pay your loan back on time, it will be reported to your credit report and can affect your ability to obtain other forms of credit in the future.
It is always a good idea to examine alternative lower-interest options before you decide to take out a pawn shop loan. Often, these other alternatives will offer more flexible repayment terms and don’t come with the same risk of damaging your credit report.