Wonder what is a pawn shop? A pawn shop may be a business or an individual offering loans to people with personal properties used as collateral. offers loans to people who bring properties with value, they may include; gold, jewelry, computers, or watches, which are usually taken as security for loans. The person concerned may then collect back their collateral item once the loan is settled plus any interest set during the agreed period.
How do pawn shops make money
Since the loan is given is returned plus Interest earned, pawnshop primarily makes money from interest they earn from the loan they provide to individuals. They also make money from the sale of retail items from loan defaulters.
What do pawn shops offer
Pawnshop work by providing personal loans to individuals, offer to resell or the retail item, and auxiliary items, and they in turn generate income from the offers that is; interest gained from loan settled and retail sales.
Providing a personal loan to individuals
Pawnshops do provide personal loans to individuals who are willing to get loans. An individual who needs to secure the loan only need to turn over any of his or her item that will work as colleteral item to secure a loan. The amount of loan and individual will secure is basically depends on the value of the collateral item provided and the current inventory at the pawnshop during the time to lend a loan.
Reselling of retail items
For the items pledged as collateral by the individuals who secured loans, the pawn shop will offer it to the market by reselling it when the individual subsequently default the loan. Thus, you can either buy new or used merchandised items from them.
Auxiliary services
Pawnshop typically offers auxiliary services which may include; western union, cell phone activation, cash checking, bill payment services, and maybe any other kind of money transfer services.
How do pawn shops work?
Pawnshops are always cautious about individuals who bring collateral items to secure loans. And due to fraudsters and thieves, pawn shops work by laws on which they require people to disclose their identification by providing drivers license. Also, they work by taking well as collateral to secure an individual’s short term loans and once the loan is settled, the individual concerned can take back the item. Pawnshops this way to avoid any fraud that may be associated in between. Pawnshops usually charge 30-day interest rates of between 5% to 25% due to high loan default. After the maturity of the loan, individuals may extend the loan for another month after paying the loan in full plus the interest.
Need you quick cash? If you have a basement full of valuable items, it high time for you to consider heading to the nearest pawn shop and walk away with money in your pockets.
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