As long as people always have a need for quick access to money then pawn shops will retain their place in society. Technology today and the gaming industry have created additional ways to access money quickly and easily. However, pawning has a head start in its history of providing quick loans using personal items as collateral easy shop for pawn
Pawning grew out of a need to get cash quickly without waiting for the slow process of getting traditional bank loans. A simple way to understand pawn shops is to see them as loan offices where the loan is given based on a percentage of the personal item(s) offered.
A pawn broker is the individual or the business that provides the loan needed. As well as offering loans, the pawn broker can also buy the item(s) at a higher percentage than when offering a loan. Pawn shops operate under rules and regulations to protect consumers.
Pawn shops are a lifeline for many people who fall under socio-economic categories such as the poor, low-income earners, unemployed, unbanked, underemployed, and/or underbanked. These people use pawn shops as alternative places for access to quick risk-free finance.
However, it is not only this category of people who use pawn shops. People from all spectrums of life pawn their personal items for cash. There are instances where one needs emergency funds for one reason or another without affecting one’s credit score in case of defaulting on the loan. The most one loses in case of inability to pay the loan is the item pawned.
Perceptions about pawn shops have not always been positive. They conjure images of seedy spaces with poor ventilation and crowded with dusty items. Customers are desperate and vulnerable to the nefarious dealings of the shady pawn broker.
While con artists exist in all industries, pawn shops are not all shady to-be-avoided places that some in the media and film industry have in the past portrayed them to be. Many of today’s pawn shops are clean, well ventilated places with attention given to professional customer service.
Usually, the pawn broker charges higher interest on the loan with additional service fee. While the interest may at times be higher than banks, the advantage is that the owner’s credit score remains intact. And once the loan is repaid the pawned item is returned to its owner.
When the owner is unable to repay the loan within the agreed time then there is opportunity to renegotiate with the pawn broker to extend the period. If payment is not renegotiated then the pawn broker recoups their money by selling the item.
To conclude, pawn shops are useful players in the money lending service industry. They are low risk and are attractive especially to those whose credit history does not favor them when seeking loans from traditional banking system.