While pawnbrokers seem to be disappearing from our landscape, they continue to exist and can be useful if your need for cash is short term.
Pawnbrokers generally loan money for a short period of time, such as three to six months, based on personal property which guarantees repayment of the loan. ("Collateral.") Pawnbrokers also generally buy items.
Pawnbrokers usually charge high interest rates.
If you do not repay a pawnbroker, there is no effect on your credit. The only downside to not paying (legally, a "default") is that you do not get the pawned item back.
These days, pawnbrokers generally work under strict state licensing requirements. Some pawnbrokers have gone upscale. There is even at least one online pawn broker: www.Pawngo.com. With Pawngo, you get an online estimate. If the number works for you, you FedEx your item to the company (Pawngo pays the cost of shipping and insurance). If the item is as billed, the loan amount is wired to your bank within 24 hours.
- Read every word of a pawn broker's contract or pawn ticket carefully. Ask if there are questions.
- If an interpretation of wording seems to go against what you read, ask that the interpretation be put in writing.
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