Should You Pawn Your Valuable Items?
Have you ever been to a pawnshop? If you have, chances are you have been surprised to see that a pawnshop looks just like any other store. There are display cases, counters, cash registers, and other familiar fixtures. Chances are you were greeted by a polite individual who treated you respectfully, and who was happy to discuss the details of your transaction.
And what kind of transaction can you complete in a pawnshop?
It is a collateral-based loan, a loan that you secure with something you own that is valuable, also known as collateral. If you use a Rolex watch to secure your loan, for example, you leave the watch at the pawnshop, which in exchange gives you a loan which will be only a small percentage of what the watch is worth. You then have a specified amount of time to return to the pawnshop to pay that loan back, plus interest and fees. If you do not return to pay by the specified deadline, that watch will then belong to the pawnshop.
As you realize, that transaction is a very good deal for the pawnshop, which can get a watch or other item for only a small percentage of what it is worth. The pawnshop then turns around and sells it for a profit. So in essence, you have given up any claim to what the item you have pawned is really worth.
That’s how it works when you pawn something. Even though you are getting a pretty bad deal, there are both pros and cons to doing it.
When It Makes Sense to Pawn Valuables
It’s convenient and fast. You need a cash loan, you get a cash loan. For people in certain circumstances, that can be important. Let’s say, for example, that you need to make a down payment on a house when you are applying for a mortgage and you are a little short of funds. Maybe pawning something will provide you with a short-term “bridge” loan.
Pawnshop practices are regulated and understandable. You might not be happy with the amount of money you will be offered for an item you pawn, but at least you will understand all the details of the transaction. Why? Because pawnshops are regulated and supervised by state agencies, and they have to toe the line by providing a complete schedule of costs and fees.
When It Doesn’t Make Sense to Pawn Valuables
Other kinds of loans could be better for you. If you go to your bank and explain your borrowing needs, you won’t need to put up valuables as collateral. Just be sure to read all the fine print about the interest rate you will be charged on your loan, the fees you will be charged if you miss a payment or default, and other details.
The pawnshop might not want what you have to sell. Don’t assume that you can immediately dispose of stuff and get a pawnshop loan. The people who run them know what items are most likely to sell, how much they will sell for, and other realities about their business. You could take old jewelry or other items into a pawnshop only to be told, “We are not interested.”
You could end up walking away from a lot of the value that is held in your valuable items. That Rolex watch we mentioned earlier, for example, could net you $4,000 if you simply sold it yourself instead of pawning it. Going the pawnshop route will offer you a much smaller payment.
Sending your precious metal items to a precious metals refinery like Specialty Metals Smelters and Refiners will almost certainly bring you more money. You will know the metallic content and value of what you are selling – whether it’s platinum scrap, gold scrap or anything else – because we will test it and send you a full report.
And What About Pawning Scrap?
Pawnshops will probably not consider paying you for your platinum, silver, or gold scrap. But chances are we will. Why not call Specialty Metals Smelters and Refiners at 800-426-2344 to learn more?