You find yourself short on cash and you have several valuables around the house that could be worth money. If there is a local pawn shop in town, you could just pawn an item to get the quick cash you need. If you have never pawned anything, you are bound ti want to know a few things about the financial side of this kind of service. Here is a look at a few things you will probably want to know about pawning an item for extra cash and other financial matters regarding pawn loans.
How much money can you get for your item at a pawn shop?
The amount of money you get will, of course, depend on what it is that you have to pawn. Higher-priced, more valuable items will yield you a larger amount of money. You can usually expect to get something like 25 to 60 percent of the resale value of the item when you pawn it. Therefore, if you pawn something that would typically sell for $100, you will likely get a loan of $25 to $60. The reason pawn shops offer a price at this percentage rate is if you choose not to come back and pick up your item, they will want to sell it and make a profit.
Does it affect your credit if you pawn something and don't pick it up?
Pawn loans do not affect your credit, even if you do not pick up your item after it is pawned. Even though there is an agreement in place that you will pick up your item or pay the interest by a certain date, pawn shops do not usually hold it against you if you do not pick something up. Plus, it would be rare for a pawn shop to report to credit agencies anyway unless they offered some other type of loan product.
What kind of interest rate will a pawn shop charge?
The pawn shop you are working with will be mandated to charge only a certain amount of interest according to state laws. The typical average is around 5 percent per month to 25 percent per month for interest charges on a pawned item, according to Bankrate. In addition to interest charges, pawn shops can charge other fees as well. For example, you may have to pay only five percent in interest, but will also have to pay fees charged for storing and insuring the pawned item while it was in the shop.