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Posted by Garden City Pawn on Thursday, December 7, 2017
Additional info from Bankrate.com about Pawn Loans
Need some quick cash? If you have an attic or basement full of stuff that has value but is only gathering dust, you might have considered heading to a pawnshop. And although you could walk away with money in your pocket, novices should learn the ins and outs of how these transactions work before they even enter the shop.
“We’re seeing more people who have never been in a pawnshop before looking for short-term solutions without having to sell the farm,” says Rick Harrison, whose family owns the Gold and Silver Pawnshop in Las Vegas and stars in the History Channel series “Pawn Stars.”
You shouldn’t feel afraid or embarrassed about heading to a pawnshop, but there are some things you need to know.
Pawnshops aren’t the shady, scary places they often appear to be in the media. “Pawnshops have been unjustly vilified by the mainstream media, and so most people perceive pawnshops to be dirty and seedy,” says Harrison.
Rather, pawnshops are regulated by 14 federal statutes and regulations, plus numerous state and local laws, says Emmett Murphy, spokesman for the National Pawnbrokers Association, or NPA. “The majority are clean, well-lit stores run by people who pride themselves on providing good customer service.”
Murphy advises checking with the local Better Business Bureau or looking on the NPA’s website for member stores in your area.
Here’s how a pawnshop transaction works:
You have 2 choices for repayment:
In some locations, you can extend the loan period by up to several months, but you’ll incur additional charges.
The dollars and cents of pawnshop loans get a little complicated because: a) rules regarding the fees vary widely from state to state, and b) it’s not a cut-and-dried interest rate.
The term “interest rate” can be very confusing, so it’s better to think of the total allowable “finance charge,” says Steve Krupnik of South Bend, Indiana, creator of the Pawn Shop Advisor coaching program and author of the book “Pawnonomics.”
“Pawnshop loans are nearly all state-regulated, and ‘finance charges’ can vary from 3% per month to 25% per month. In Indiana, the ‘interest rate’ is capped at 36% APR or 3% per month, but pawnshops can charge an additional 20%-per-month service charge, making the total allowable finance charge 23% per month,” says Krupnik. In Michigan we charge 3% per month!
However, Krupnik says, “The pawn industry is evolving rapidly and these maximum finance charges are voluntarily being reduced by many operators, especially on larger pawn loans that are now becoming the ‘new norm.’”
A personal loan is a good alternative for those who need money for travel or a home renovation. Find the best rates at Bankrate.com.
“These are what we call ‘safety net loans’ and are usually for life emergencies,” Murphy says. The typical fee, he adds, is often lower than the cost of a bounced check or a disconnected utility.
To learn the maximum rates allowed in your area, along with any rules regarding pawnshop transactions, check your state’s website; most likely, the information will be in the consumer protection section.
The bottom line: Make sure the pawnbroker clearly explains all the fees involved in your loan before you finalize the transaction. These terms also should be listed on your pawn ticket.
When considering pawning something, keep these tips in mind:
Don’t: Offer anything outdated, difficult to store or cheaply made, Krupnik advises.
Do: Go with jewelry or coins, Harrison suggests. Other good choices, according to Krupnik, are firearms, high-quality tools and musical instruments.
The pawnbroker is legally obligated to confirm that you are the legal owner of the property.
“They will ask you enough questions about your property to become comfortable with the fact that you own it,” says Krupnik. “Do not be offended; the pawnbroker is just trying to make sure that both you and the property are legitimate.
Also, if you do business with the pawnbroker, expect to have to show a government-issued ID. It is required by law.”