How Pawn Shops Are A Great Alternative To Banks For A Short-term Loan

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Loans are a necessary financial endeavor for anyone looking to start looking into an expensive project, or to help deal with unexpected costs. However, not every type of loan is built the same. Some loans are highly predatory, and can lead to more difficult issues than the problem you were solving in the first place. Banks can also add additional hurdles to the process of getting a loan. Pawn shops are a great alternative to banks for a short-term loan; here’s why.

What is a pawn shop loan?

First, we should talk about what a pawn shop loan actually is. These loans are deceptively simple; you bring an item into the store, and receive a loan against the value of that item, which is held as collateral. The value of the item determines the value of the loan. Additionally, while other loans usually have high interest rates, these loans end up being much lower on the over time cost due to having your item as collateral. If you fail to pay the loan in time, they simply keep your item; no damage to your credit.

This style of loan is incredibly useful for anyone needing a varying amount of small cash, such as to tide over for the next paycheck, or fund a small project that needs a short term influx to get started. Additionally, the most risk you incur is that you may be banned from said pawn shop if you fail to pay off your loan; as it is dealt in cash in most stores, your credit is completely unaffected, unlike many other types of loans. You also control how much value you get out of the loan; need only a small amount of cash? Use something worth less to adjust the value of your loan, and vice versa.

Why are pawn shop loans safer than banks?

In contrast to banks, pawn shops usually don’t have an approval process, or extensive paperwork. Banks often can take a significant deal of time processing your loan from running background checks, contrasting your credit score, or even just bureaucracy. While going through a bank is usually the safest option, there is a penalty with the cost of your time. And, as everyone says, time is worth money. If you’re looking for a loan that doesn’t really need this sort of extra time and effort, consider using a pawn shop loan in order to make your life easier in the long run.

Are there any other alternatives?

These loans are also safer than most other quick loan alternatives, such as payday loans. Payday loans and their equivalent can directly hurt your credit score, and also run up with obscenely high interest rates to make their money, often costing you a significant chunk of extra money.

Whether you just need a quick bit of cash, have too low of a credit score to go through a bank, or simply don’t want to deal with the hassle of going through your bank, a pawn shop loan is almost certainly the best route for you. With little risk, no hassle, and same-day cash, this type of loan is one of the best ways to fund something that requires just a bit of cash and nothing more. Swing by Gems N’ Loans today for your short-term loan!