In the 80s and 90s most middle-class Australians associated pawnshops with the kind of place you wouldn’t want to be caught dead in. They were supposed to be seedy places that people only frequented when they had items attained with questionable means or they were in such dire financial strains they would hock anything of value. These days, things are different and people have become more accepting of pawnshops, seeing them as what they truly are, an alternative way to sell unwanted goods or to get loans using their valuables as collateral. The image that pawnshops had has changed significantly. People see them as a legitimate part of the financial industry albeit an informal part of it.
How do pawn shops work?
Pawnshops will either give you a loan based on the value they put on an item you bring in or they will buy the item from you to sell for a profit. When you pledge something like jewellery, electronics, cellphones, etc. to a pawn shop Brisbane, the pawnbroker will lend you money as a loan. You will then have to pay back the loan plus the interest charged within a specific time frame in order to get your item back. The pawnbroker will lend an amount that is anything from 40-80% of the market value. Different pawnshops offer different prices so you might want to take your valuable items to a number of pawnbrokers to get the best price possible.
If you fail to pay the loan back within the agreed term, the pawnbroker will sell the item to recoup the money loaned and make a profit.
Why should you consider a pawnshop?
- A pawn shop loan is ideal if you are unsure about your future finances. for instance, if you hock your expensive gold wedding ring and after the repayment period goes past and you are still having financial problems and you can’t make repayments, the pawn shop Brisbane will then sell your ring and that would be the end of your debt.
However, if you borrowed cash from conventional short term money lenders, missing your repayments can result in compound interest on the dept. After a few months, the amount would have snowballed, sinking you further into debt.
- Even though pawnshops charge interest, the amount of interest they charge is often less than the interest an average credit card would charge. However, the interest rates might be higher than what a bank would charge you for a personal loan. Other money lenders like payday lenders may charge interest as high as 4%. You do need to consider your financial situation and have a plan to pay back the loan if what you hock is very valuable to you.
- Pawnshops are more accepting. You only need to produce your identity document to access a pawnshop loan. There are fewer restrictions than other financial institutions that would normally require proof of income and a good credit rating. If you have bad credit or you don’t have a stable job, there would still be no reason why a pawnbroker would refuse to lend you money against something of value – after all, he has nothing to lose if you don’t show up to repay your debt.