So you want to get extra money fast and are about to pawn your item? Good choice! Not only will you get cash on the spot, but you also won’t affect your credit and will have the opportunity to redeem your item when you repay the pawn loan and small fee. But what happens if you do not return to reclaim your pawned item? Get to know what your options are if you forget to or are unable to repay your pawn loan in time to redeem your item.
What is a pawn loan?
Many people use their valuables on a regular basis to help make ends meet. Oftentimes a pawn loan is the best solution when an unforeseen need for short term financing arises. With a pawn, the borrower simply brings in the item they wish to use as collateral to help secure the loan along with their government issued ID.
The loan amount is based on a percentage of the value of the item being pledged. The borrower must repay the loan in full plus the small fee (typically due in 30 days) in order to get their item back. Learn more here: How much does a pawn loan cost?
Knowing your options
Unlike with other loans, when a pawn is due, the borrower has many options. The borrower may repay the pawn loan to retrieve the item, pay the interest to renew the loan for another 30 days and keep the account active, or choose to keep the borrowed money by not paying back the loan at all and therefore forfeit the pawned item.
- Paying your loan (or the interest). The borrower may repay the pawn loan to retrieve the item on or before the due date. If you are unable to repay the loan in full when it’s due, you may pay at least the interest on the payment due date to keep the account active and renew the loan for another 30 days. You will be charged an additional fee each time you renew based on the amount outstanding, so it is encouraged to pay the interest plus any additional amount you desire to pay towards the principal balance (or borrowed amount).
- Paying late (or not paying at all). When a customer decides that instead of repaying the borrowed money it is in their best interest to retain the borrowed funds (or the funds may not be available), the item is relinquished to the pawn shop and made available for sale. One of the most useful features of a pawn is that if circumstances demand it, a borrower can choose not to pay back the loan with no effect on their credit. Since credit is not a part of a pawn transaction, if the account becomes past due for 32 days after the due date for example, the borrower will instead forfeit their item to be sold by the pawn shop. Don’t try that with your car or furniture payment! As you know with your car or furniture loan, a non-payment ultimately will affect your credit; and a repossession on your credit report can therefore affect your ability to get a better rate or perhaps to borrow at all.
- What can you do if your item is forfeited? Although it should not be relied on, it is not unheard of for a relinquished item to be repurchased at a later date at its retail price by the person who pawned it. A relinquished item which remains available for sale may have its pawn reactivated for the interest amount due or paid out if all components of the pawn are still available.
Despite what one may believe, pawnbrokers do not set out to confiscate pawn items so they can be sold. In fact, it’s in their best interest to create happy pawn customers who are likely to return to pawn the same (or more) items should they need extra funds again in the future. Pawnbrokers know that if they sell an item that was pawned, they may only make their money back once, but if you redeem your item and need their services again, that item could create repeat business for them in the future.
As you can see, several options are available when you get a pawn loan; and on top of that, recovery may still be possible even after the pawn’s active term has expired. Being aware of the options available during the life of your pawn transaction will create a more satisfying pawn experience.
Have more questions about pawn loans? We’ve got answers. Quik Pawn Shop in Alabama is a family owned business with a customer first mentality. They do their best to cater to the needs of their customers and help them find what they are looking for at the best price possible. Customers have trusted them for nearly 40 years, and so can you! Speak to our friendly team at 855-402-PAWN (7296) to get started or click here to find a Quik Pawn Shop near you.
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