When most people’s ideas about pawn shops come from movies and television, it’s no wonder that the actual operations of a pawn shop remain a mystery. Here’s the mystery unraveled: to get a pawn loan, also known as a collateral loan, a borrower brings a pawnbroker an item of value—jewelry, electronics, tools, guns, musical instruments—and the pawn shop makes a loan based on the value of the collateral.
The customer pays the loan back according to the government-regulated contract, and the pawnbroker returns the item. If the borrower does not pay back the loan, the pawnbroker considers the collateral payment in full, and he puts it on the market for retail customers. If a borrower needs more time to pay back the loan, many pawnbrokers are able to offer extensions and renewals.
Why do people use pawnbrokers? Because they specialize in short-term loans that are quick and confidential, and don’t require lengthy credit checks, paperwork, and interactions with banks. And if, for some reason, the customer doesn’t pay the loan, there are no legal consequences either. And for people who’ve had problems with credit cards etc., pawn loans ensure that nobody is borrowing more than can be paid back.
Though pawnbrokers specialize in short-term small loans—which are government regulated—they can also offer long-term loans with flexible payback. And because pawnbrokers have the collateral to guarantee they won’t lose any money, they offer interest rates that beat out banks.
It really is easy. Visit a Fort Lauderdale pawn shop like National Pawn and Jewelry, and we can answer all your questions.