Due to the recession, many people do not have good credit anymore. Although the economy has recovered somewhat, lenders are still strict about who can borrow from them. Those who have good or excellent credit can find loans and credit cards easily. Those who have mediocre or bad credit may have far more difficulties in borrowing money from financial institutions. Those with less than perfect credit may need to look at other sources of borrowing for instant loans. One option available to almost anyone is to get a loan from a pawn shop.
With a pawn shop loan, the lender does not care about the borrower’s credit. The store is not going to run a credit check. That is the big advantage with instant loans from pawn shops. Those with the worst credit scores can borrow from a pawn shop. The pawned item will serve as collateral for the loan. Borrowers should not expect to borrow more than a fraction of the current market value of the item being pawned. If the customer accepts the pawn shop’s offer, he or she will receive the loan disbursement in cash along with a claim ticket to collect the pawned item. The borrower will have to repay the pawn shop loan in full with interest to get the pawned item back. If the borrower cannot repay, the pawn shop is free to sell the pawned item. However, there is no damage to the borrower’s credit for not repaying the pawn shop. Those that want to reclaim their pawned items after the expiration of the claim ticket may want to talk to the pawn shop to figure out if an extension of the loan is a possibility.
There is a cost to borrow the money from pawn shops such as the Sam Light Loan Company. Some feel that the fees and interest may be high. However, borrowers need to remember that the shop has to store the item securely and make it available to borrowers who repay their loans. It costs money for a pawn shop to hold items that cannot be sold on the retail floor. Furthermore, the pawn shop’s only recourse for a borrower who doesn’t repay is to sell the pawned item. There is no guarantee that the shop can sell the item at a high enough price to cover the loan. That is why borrowing from pawn shops can be a bit expensive.
