Pawn shops give people the opportunity to take out short term loans using items like gold jewellery as collateral. These are small businesses that exchange goods for low value cash loans. When you bring your items to a pawn shop Brisbane the pawnbroker assesses the value of your item and offers you a certain percentage of that value in cash. You have a short period of time to repay the loans and the interest and get your item back. This period is usually 30 days, but it varies from pawnshop to pawnshop. If you fail to repay the loan on time the pawnbroker will assume ownership of the item and then sell it for a profit.
For example: if you brought your 22k gold wedding ring, the standard gold band without a gemstone, that you’ve owned for ten years, the pawnbroker might offer $20. It won’t matter that the ring cost you $200. When you accept the $20 offer you would be issued a receipt that states:
The item pawned and your acceptance of your offer and the repayment period. It would also include the interest rate and the percentage of fees charge on your $20. It will give you the total amount you have to pay at the end of the contract. Let’s do a bit of maths $20 + 2% interest + 20% admin fees work out to: 20+ 0.4 + 4 = $24.4.
There are options that are open to you when you pawn your gold:
#1. You can pay the full amount $24.4 to retrieve your gold ring.
#2. You can pay the monthly fee, which would be $4.40 (if we take the example). This will help you extend the loan for another 30 days. You would need to enter into a new contract for the next days.
#3. You can do nothing and let the pawnshop keep your ring and sell it.
This basic transaction happens all the time at big and smallpawn shops. For most communities pawn shops are an easier way to get small amounts of money as loans, they are certainly better than payday loans which charge exorbitant fees. Banks will have you jumping through hoops just to get a $200 loan and you may have to wait for your application to be processed and approved. Banks also consider your credit score when processing a loan application. This means if you have a low score then you won’t get the money you desperately need. PawnshopBrisbaneare quick and convenient and that is why they have flourished all these years.
Going back to the example above, a fee of $4.40 for a $20 loan payable in 30 days may seem steep, but it is considerably lower than what you would have paid for a payday loan and it is convenient because you don’t have to lose your gold as long as you pay back the loan on time.
What do pawn shops accept?
Contrary to popular belief, pawn shops don’t accept everything. Taking into consideration that they might end up having to sell, they are more likely to accept high-quality products or than old damaged items. The point of it all is that you have to bring items that are valuable and are more sellable. Gold jewellery is a perennial favourite.
Advantage of pawn shops
Pawn shops make it easy for people to get cash when they need it. They are especially a good choice when you need a small amount of money. It is quick and they do not conduct credit checks.
The interest rates vary from shop to shop, but they are incredibly high. 2 – 8 percent per month may sound reasonable, but it works out to over 24% – 96% annual percentage. You can easily fall into a debt cycle if you don’t have a plan to service your pawn shops debts. You should not pawn antique items, vintage and gold items with a significant personal value. If you cannot afford to lose it, don’t pawn it.