Pawn Shops Don’t Require An Application

Walking into a bank or another traditional financial institution, you go up to a teller and ask for a conventional loan. You sit with a loan officer, and you need to fill out a pile of forms and provide all of your financial information. Your privacy goes out the window, and you need to get the information on the application so the officer can inform you it will take several business days to get the loan processed and approved.

A pawn shop doesn’t have an application for a personal collateral loan. They don’t gather information about your credit history, employment records, bank account information, assets, payment history, debt to income ratio, or any other information. They need a personal asset with the value of the loan amount you need and a state-issued ID. There is no wait-and-see. Your item goes through an appraisal process, and you leave with cash immediately.

There is no waiting period to approve the loan.

Pawn Shops Don’t Do Credit Checks

When you walked into the bank or other financial institution that offers a conventional loan to customers who qualify, part of the process is a credit check. They run your name and social security number through the different credit bureaus gathering credit checks and scores. Suppose you have a low credit score due to debt collectors, too many credit inquiries, or a sizeable principal loan amount on various accounts. In that case, your credit score will be affected, and your credit rating may not be enough to get the loan amount requested.

Pawn shops don’t run credit checks. The loan amounts given are based on what you request and the assessed value of the items you brought with you to use as collateral until you pay back the loan.

Pawn Shops Don’t Report to the Credit Bureaus

Installment loans that don’t receive on-time payments will not only affect your credit score but will also affect your overall credit. Late payments are reported to the credit bureaus, and due dates are set in stone and may have a short grace period; your credit score takes a hit if you don’t make the payment on time.

Pawn shops don’t report to the credit bureaus. The credit bureaus don’t know you borrowed money at a pawn shop, missed a payment, or decided to relinquish your item to pay back the loan in full.

This is because your personal loan is secured by the collateral you gave to the pawn shop to secure the loan.

Pawn Shops are Safe

There are alternative financing options, but they may cost you more in the long run. Payday loans create an ongoing vicious cycle that traps borrowers into living from payday to payday. Payday loans that advance money are not regulated, so they have exorbitant interest rates.

Personal loans negotiated with friends, family, or employers risk destroying personal relationships if the loan isn’t paid back or on-time payments aren’t received as agreed on.

Pawn shops have to meet stringent state law and federal law requirements. They charge fair interest rates and are designed to be short-term, so the interest rates don’t add up over a long time.

Pawn Shops Offer a Confidential Process

No information is gathered for pawnshop loans like employment history and the value of your house. The collateral provided is what is used to secure the loan. Because of this, taxes, liens, reporting, or other publicly available information won’t know about the pawnshop loan.