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Top 3 Reasons to Avoid Pawn Shop Loans

Top Reasons to Avoid Pawn Shop Loans

Each person may face a difficult life situation that requires extra cash. But there are not so many ways to get a quick loan. One of them is a pawnshop loan. Currently, there are a lot of shortcomings in the activities of pawnshops. But, despite them, the demand for pawnshop services in the US is still high. This is due to easy access to financial resources in pawnshops. Such companies advertise same-day funding. Although, if you look closely, there are quite a few problems in the activities of pawnshops.

Today we will look at the main reasons why you should still avoid this method of getting fast cash and consider more profitable alternatives to a pawnshop.

Why should you avoid pawnshop loans?

Reason 1: The possibility of losing collateral

This scam lies in the fact that the appraiser deliberately does not indicate all the collateral in the loan agreement and then can extract from the configuration what is not indicated. For example, a memory card, video card, headphones, battery, case and charger. Even if the client decides to write a statement about the theft, and the security finds a video where it is clear that the appraiser took, say, headphones with the phone, it is almost impossible to prove that it was he who hid them. Less often it happens that the pawnshop owner can completely replace the subject of collateral.

Reason 2: Damage to collateral

Often, broken or damaged equipment is returned to customers. It gives the impression that it is carelessly used, or the pawnshop does not have the necessary conditions for storing equipment.

In fact, unscrupulous employees can use collateral, especially if they know that the camera will not capture this because there are “blide zones” in the room that do not fall under the lens.

But often collateral items break because pawnshops do not have good conditions for keeping the goods intact. For example, according to a former pawnshop employee, the guitars simply piled up, the tablets lay on top of each other and could easily fall.

The new draft law describes clear conditions for pawnshop premises. But at the moment, the pawnshop must create the necessary conditions for the storage of goods. The pawnshop is determined to ensure that the client returns, so they are interested in creating good conditions for storing equipment.

Another variant of the scam: expensive parts in the equipment are replaced with cheaper ones or they are completely removed.

Reason 3. Fake pawnshop

Some stalls open under the sign of a well-known network of pawnshops. People believe them because they allegedly represent a well-known network of pawnshops, but in fact it is a one-day pawnshop that can disappear along with your property at any time. Or your property will be lost, and no one will demand compensation since the pawnshop does not legally exist.

Is there a better alternative to pawn loans?

Microfinance institutions are companies that lend to borrowers without requiring collateral. Such companies appeared on the lending market relatively recently but managed to gain popularity.

Microfinance institutions operate according to a simplified scheme. To apply for a payday loan, you just need to fill out an application form. You can apply for a loan around the clock and have get money in your bank account as soon as the same day. Most loans up to $1,000 are issued within 10-30 minutes. The key advantage of this product is that most lenders process applications online. You can fill out an application online to get access to fast cash right now – with no collateral and no credit checks:

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There is another advantage of applying for a payday loan. If it is impossible to repay the loan on time, you can contact your lender and find the mutually beneficial solution to the problem. Most pawnshops do not meet you halfway and sell your property immediately. And microfinance institutions make it possible to defer payment or extend the term, taking into account the current situation of the borrower. Yes, the lender can increase the loan rate at the same time, but you will not lose your property and will be able to return the money as soon as you have it.

The main advantages of payday loans over pawnshop loans can be formulated as follows:

  • no need to provide collateral;
  • simple online application 24/7;
  • speedy lending decision and funding;
  • the ability to get a loan while at home;
  • more loyal attitude to the borrower.

Thus, taking a payday loan is more profitable and more convenient than contacting a pawnshop. A payday loan provider transfers money to your bank account literally within half an hour and does not require proof of income – what else could be easier?