A pawnbroker will give you a short-term loan in exchange for your valuables. If you repay the loan and the interest, you’ll get your item back. If you can’t come up with the cash, the pawnbroker will sell your item to cover the cost of the loan they made.
A logbook loan is similar, but in this case, your car is what you’re using as security for the loan. The law in this area is complex, so make sure you understand what you are getting into, how it works and what could happen if things go wrong.
Pros and cons for Pawnbroking
- You can borrow a larger amount if your valuables are worth enough.
- Interest rates are usually lower than those for payday loans.
- Interest rates are still very high compared to most other ways of borrowing money.
What to watch out for Pawnbroking
- Do some research in advance so you know the true value of what you’re handing over.
- Get clarification on the total cost of the loan, including all interest and fees.
- Make sure you understand how to get your valuables back at the end of the term.
There’s always a chance you may not be able to repay the loan, so don’t pawn something you can’t afford to lose. For example, if you need your car for work, don’t get a logbook loan.
Look for a pawnbroker that's a member of the National Pawnbrokers Association (NPA) as there is a code of conduct plus sanctions if members breach the code, so you have additional protection above what the law provides.
No comments:
Post a Comment