In the current conditions of the financial crisis, many people are facing the acute shortage of money. Having realized that a certain amount is not enough for an urgent purchase, the majority seeks a bank loan or takes loans from friends and acquaintances. But there is another category of people who goes to a pawnshop for a loan secured by jewelry or other valuables. They rightly believe that a pawnshop is The best opportunity to quickly get a short-term loan. After all, not everyone has additional sources of income or generous relatives who are able to provide financial assistance at the right time .
What is a pawnshop?
Those who do not know what material difficulties are are unlikely to understand why people go to pawn shops. Of course, if a person urgently needed money and there was nobody to borrow it from, you can sell any of the things. But not everyone wants to part with their favorite things, and then people give them as collateral with the possibility of subsequent redemption.
A pawnshop is a legal commercial institution whose activities are based on mortgage principles. Here, everything is quite simple: a person in need of money, in exchange for a certain amount, leaves a pledge of his value. Upon completion of the pre-agreed terms, the mortgagor has the right to redeem his property, having paid for it the amount received earlier and the interest that has accrued during this time. As a deposit, you can leave only personal belongings, including precious metals, household appliances, motor vehicles, electronics and jewelry. Recently, the so-called watch pawnshop has become particularly popular, providing an opportunity to profitably lay or sell luxury Swiss watches.
What do we give and what do we receive?
You can get money only for things that are of a certain value. The amount of cash issued by the pawnshop is determined taking into account the real value of the collateral provided. Obviously, the estimated value will be several times lower than the amount that you paid when acquiring the property to be rented. Before you hand over your favorite thing to a pawnshop, you need to think it over carefully. Indeed, in case of non-payment by the pledger of the agreed amount, the institution will have to sell the collateral property, and this entails a multitude of current expenses. Therefore, you should not naively expect that for your brand-new tablet worth $ 500 you will get at least 400. In reality, the amount will be much less, and in different pawnshops the estimated cost of the same thing can differ significantly.
When returning the collateral, the borrower will have to pay not only the amount previously received, but also a certain percentage. The terms of payment and the rate for using money in different pawnshops can be very different, and this needs to be known in advance. It is worth noting that the percentage is quite high, therefore, cooperating with such institutions is beneficial only in the case of a short-term loan.
Pros and cons of contacting a pawnshop
One of the main advantages of going to a pawnshop is the speed of the transaction. To obtain the required amount, it is enough to have some kind of value and a passport. The paperwork takes no more than half an hour. The second argument in favor of such collaboration is accessibility and simplicity. This is especially true for people working without official confirmation of income or having a bad reputation in banking institutions.
In addition to the above advantages, working with pawnshops has a number of significant drawbacks, one of which is the high interest rate charged for using a loan. However, when it comes to
short-term loans, the amount will not be too large. In addition, pawnshop technology
does not issue large loans.
Rights and obligations of the borrower
To use the services of a pawnshop, you need to provide not only collateral property, but also a passport. Upon completion of the evaluation procedure, a contract is concluded with the client. The pledger receives cash and a security ticket - a document that allows you to redeem the thing left. It must indicate the address of the pawnshop, by whom and to whom the ticket was issued, a description of the pledged property, the amount received by the client and the terms for its return.
If after a specified time the client does not redeem his thing, then a month after the end of the contract it becomes the property of the institution.
How to get money without becoming a victim of fraud?
Before concluding an agreement, you must make sure that the pawnshop has all the permits. There must be money at the checkout. Their absence should be a reason for refusing to deal with such an institution. An important role is played by the level of work and the situation of the pawnshop. Many modern institutions have payment machines.
In addition, one of the common tricks used by an unscrupulous pawnshop is raising the interest rate. Therefore, it is very important to carefully read it before signing the contract.