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Size Of My Pawn Loan

by | Oct 7, 2020 | Blog

People considering going to a pawn shop want to know just how much they can take out as a loan on an item. To get to that, you need to understand the basis of how pawning and loans at pawn shops work. At the core – you bring an item, that item is assigned a resale value, and then you will receive a percentage of that resale value in the form of a loan. Each month, you pay a percentage of that loan to keep the item from being listed at the resale value. If for any reason you cannot make a payment, or you do not wish to make a payment – then you can let the loan expire and the pawn shop puts the item up for sale.

The exact amount of loan is contingent on the value of the item that you are planning on pawning. Let’s say that you have a ruby necklace that you bring over to a pawn shop. The pawnbroker in the shop will assign a certain value to the necklace, lets say $2000, and then offer you a loan based on a percentage of that number, roughly $800. The pawn broker then levies a 10% interest rate on the loan. Each month then you are responsible for $80 dollar interest payments to keep that loan active.  

A loan that a pawn shop offers generally falls between 20% and 60% of the resale value of your item. You are usually given a fixed period to pay back the loan (including interest) – after which your item gets listed for resale.

Keep in mind though that pawns shops can at time charge higher interest rates than other financial institutions. These rates can vary from 10% to close to 200%; depending on whether law of the state limits interest rates, a pawn shop can charge a customer. Moreover, the pawnbroker may also charge you insurance fees and storage costs.

To summarize, when you are seeking a loan keep in mind the potential resale value of that item. Expect that when you go to pawn the item, you will receive an offer between 20% -60% and have a 10% – 200% interest attached to it each month. Everything depends on how much money you are interested in leveraging and the pawn shop’s individual terms. As always it’s important to make sure that you do your research before entering into any type of agreement with a financial institution.

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