It will be more profitable to take out a personal loan online than to seek the help of a pawnshop.
There can only be two reasonable reasons for taking out a personal loan online. First, if you put that money into something that will pay off the cost of the loan multiple times. The second is the appearance of some kind of force majeure, the consequences of which you cannot overcome without a personal loan.
Unfortunately, even highly organized and financially disciplined people are not immune to basic mistakes, accidents and twists of fate. Together with our experts, we decided to figure out what to do if a small amount of money was needed unexpectedly and urgently. It will be more profitable to take out a personal loan online than to seek the help of a pawnshop.
Loan to Pawnbroker Pros and Cons
In our psychology, the association is firmly entrenched that only people in dire straits turn to pawn shops. Laying in a family heirloom or a work laptop: what’s worse? It is always worth considering an online payday loan.
Cooperation with a pawnshop can be of great benefit to both parties. Of course, subject to all the conditions for granting a loan including an online personal loan. The first and most important of the pawn shops is that they will not require any confirmation of creditworthiness as can be the case when receiving a personal loan at a bank without registration and even identification code. Plus, you can even calculate a title loan using a title loan calculator on MoneyZap, if you need a loan for a very short time. To get money, all you need to do is provide a cash deposit and proof of identity: internal passport, driver’s license, international passport, military ID card, or any other document where your full name is indicated. There must be a photo and a signature with the seal of the official who issued this document.
The second advantage is speed. No credit committees! Everything is decided directly at the office of the pawnshop. They will tell you immediately whether or not they will give it away and if so how much. Then the customer makes the decision. After all, the cost of money from the “pawnshop” is quite high: from 0.3% to 1.5% per day. That’s 109.5-547.5% per year. For comparison, even the most expensive pre-payday bank loans will cost 60-80% per year. Still, it will be difficult to get a one-year loan from a pawnshop.
The average loan term for these financial institutions is around one month. The maximum loan period for contracting a personal loan is approximately 3 months. It is only offered by large pawnbroker chains.
Splendid pledge to the pawnshop
Most often, pawn shops accept jewelry, silverware, gold bars as collateral. When it comes to simple gold products or bullion, most pawn shops directly on their websites let you know how much money they are willing to give on the security of 1g of “yellow” metal. During the year, that number has increased by several dollars. If you are thinking of putting on an exquisite gem encrusted piece of jewelry, then don’t expect to get a fair price for it. Pawn shops are not yet allowed to trade in jewelry but only hand it over to scrap.
Therefore, they are rated accordingly based on weight. There may also be problems with placing objects made of platinum, diamonds, emeralds. Many pawn shops simply don’t have appraisers (typically they belong to large networks of pawn shops). If there is still an appraiser in the pawnshop, then on the security of the jewelry you can get 50-70% of its value. This is due to the fact that the gemstone market is somewhat limited. Therefore, it can be difficult to sell them more for pawn shops. In this case, the online personal loan wins.
Online Payday Loan Or Pawn Shop?
Many people have more than once found themselves in a situation where money is needed within hours. This is good if you have relatives or friends who are ready to lend a helping hand at any time and lend you money “until payday”. If it’s not about you, then every time you find yourself in a similar situation. You need to look for a lender to take out a payday loan online.
Some of the more popular lenders are pawn shops and microfinance organizations that can lend you money or a payday loan. The conditions for obtaining a loan from these organizations are fundamentally different. Therefore, before making a choice, carefully weigh the pros and cons of the two lenders when taking out a personal loan online.
Pawnbroker Loan: What’s the Catch?
A pawnshop is an issuing point for loans secured by a property. This property is the main disadvantage of pawn shops. To get a loan, you will need to give (even temporarily) something of value. The following items can be used as a guarantee:
– valuable jewelry;
– precious metals in ingots;
– precious stones;
– collector coins, weapons;
– rewards in precious alloys;
In addition, you will have to entrust your property to an unknown person. Its value must exceed the loan amount by at least one third. In some cases, the assessed value of the collateral must be double the value borrowed. Few are satisfied with such conditions. Thus, other people are turning more and more to microfinance organizations and obtaining payday loans online on more favorable terms.
Benefits of microcredit
Microfinance organizations (MFOs) are businesses that lend to borrowers without requiring the provision of collateral. These companies appeared relatively recently in the credit market, but with good reason managed to gain popularity. Microfinance organizations operate according to a simplified scheme. To apply for a personal loan online, all you need to do is complete a form made up of simple fields. By taking out a personal loan from an MFI, you can get money on any bank card. Most MFIs give a loan in 10 to 30 minutes. In order to receive the money, you don’t have to leave your home because payday loan services process the applications online.
There is another advantage of applying for a personal loan from an MFI. If it is not possible to repay the debt on time, you can “negotiate” with the MFI. Most pawn shops, in the event of a debt repayment delay, don’t party and immediately put the property up for sale. Microfinance organizations offer the option of deferring payment or extending the term taking into account the borrower’s current situation. At the same time, the MFI can increase the loan rate but you will not lose your property and will be able to return the money as soon as you have it.
The main advantages of MFOs over pawn shops can be formulated as follows:
– no need to pay a deposit;
– the most simplified loan scheme;
– efficient processing of requests;
– the possibility of obtaining a home loan;
– a more loyal attitude towards the borrower.
Thus, taking out a personal loan online is more profitable and more convenient than giving a valuable piece of jewelry, equipment or a grandfather’s reward to an “uncle of a stranger”. The MFI transfers money to any card within half an hour and does not require confirmation of the borrower’s creditworthiness. What else could be easier?
About the Author:
Frank Glemstone – Frank graduated from the Masters in Economics program. He has written extensively on personal finance and wealth. As the principal author of MoneyZap, he now works with clients across the country, helping them achieve their financial and life goals.
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