Pawnbroking doesn't always enjoy a clean-cut reputation, but often any negativity is because people don't fully understand how it works. When used appropriately, pawnbroking can offer many benefits that are well worth considering if you need to get hold of instant cash.
Quick access to cash
One of the main benefits of using a pawnbroker is that you can get quick - usually instant - access to cash, whether you sell your valuables to them, or you use your valuables as security for a loan.
Whether you've got outstanding bills to pay, or unexpected expenses crop up, using a pawnbroker can be a useful way to tide you over. With no confusing application forms to fill out, or lengthy periods to wait to gain cash approval, a pawnbroker offers a convenient, speedy and hassle-free way to get your hands on some cash. All you need is proof of identification and the item to be pawned.
No credit checks needed
When you apply for a loan from a financial institution such as a bank, they'll perform a credit check as part of the application process. This is done to assess whether you would make a good borrower. If you have a poor credit history, there's a strong chance your loan application will get rejected.
When you use a pawnbroker to borrow cash, no credit checks are undertaken, so your credit history is irrelevant. This makes borrowing via a pawnbroker a feasible option for those who can't get a loan by the usual means, because of a poor credit rating.
Many banks have tightened up their policies on lending, particularly following the recession of recent years. This has made it harder for people to secure a loan who previously would have been approved. This, together with an increase in gold prices, has boosted the profile of pawnbrokers in recent times, making than an increasingly attractive proposition.
Although the interest rate you pay on a pawnbroker loan is often higher than a standard bank loan, because most people need the cash quickly and are generally able to repay it back over a short period of time, it can still prove an affordable option. Using a pawnbroker also tends to be a cheaper option than choosing a payday loan. If you manage to pay the money back earlier than you anticipated, you won't get charged any early payment penalties and will only have to pay the interest up until this time.
Long-established and regulated
Pawnbroking has been around for hundreds of years. In fact, experts reckon that the basic principles of pawnbroking were practised around 3,000 years ago in Ancient China. As a long-established money lending service, pawnbroking is tried and trusted, and continues to have a place on the high street.
Although you often hear of shady pawnbroking dealings, in the main, the majority of pawnbroking establishments are reputable businesses. They are often friendly, family-run jewellers, like Albone, who want to see people redeeming their pawned items.
Pawnbrokers are regulated by the Financial Conduct Authority. This ensures that businesses working in the finance sector operate openly and honestly, so consumers get a fair deal. If you feel that you haven't received a fair or reasonable deal, then you can take your complaint to the Financial Ombudsman Service. It's also worth choosing a pawnbroker who is a member of the National Pawnbrokers Association, such as Albone.
Additional regulatory protection from pawnbroking is also supplied through the Consumer Credit Act 1974. This means that when you make a transaction with a pawnbroker, you must be given a receipt. This should detail the redemption period end date, the amount of credit and interest rates, and other charges that may apply. As part of the Consumer Credit Act 1974, you'll also be given documentation explaining your rights and protection, and other terms of the loan. You also have a 14-day cooling off period, should you change your mind during that time.
Pawnbroking offers a fairly flexible way to raise some cash. In fact, you can pretty much pawn anything of value that is saleable. Most people tend to pawn jewellery, gold or watches, but other popular items to pawn include designer clothes, handbags, cars, speed boats, electrical items, rare coins and works of art.
Flexibility isn't just related to what you can pawn, either. There's also a wide variation in how much money a pawnbroker will lend. This can range from as little as £5, up to several thousand pounds or more.
Crucially, you can also enjoy great flexibility with regards to the terms of your loan, so that you can pay it off to suit your circumstances, and even get an extension, if necessary.
When you take out some types of loan, they often come with lots of risks attached. If you can't afford to make the repayments, you risk having debt collectors come knocking at your door. In the worse case scenario, you might lose essential assets, such as your home. Having to worry about these risks and ensuring you make repayments can prove extremely stressful.
If you use a pawnbroker, you don't need to worry about these risks, giving you great peace of mind. With your pawned possession held as security, in the unlikely event that you can't pay the loan back, the most you lose is this item. You won't have debt collectors chasing you, and your failure to make repayments won't impact on your credit rating. Little wonder then, that most customers are satisfied with the services offered by a pawnbroker.
If you're unable to pay the loan back, the pawnbroker is then in a position to keep the item and sell it on. It's worth bearing in mind, however, that in nearly nine out of ten cases, customers are able to redeem their pawned items. It's also in the pawnbroker's interest for pawned items to be redeemed, so they'll aim to offer a personalised service that meets your individual requirements.