A Simple Solution for Quick Cash

cash_in_handNeed quick cash? Credit cards maxed out? Look no further than your jewelry box or attic to uncover buried treasure in the form of jewelry, art and other valuables. Turning those valuables into cash is as easy as a trip to your local pawnshop.

Not ready to part permanently with Grandma’s wedding ring? No problem: Pawnshops grant short-term loans using your personal property as collateral, providing you with money in as little as five to 10 minutes, and best of all, no risk or effect on your credit, even if you default on the loan. Once you repay the loan — usually in one to four months — and the small loan fee, Grandma’s ring is returned to you

The average pawnshop loan is only $75, and the average pawn customer is 36 years of age, has a household income of $29,000 and comes from all ethnic backgrounds, according to the National Pawnbrokers Association (NPA), a 2,400-member trade association. The NPA estimates that 80 percent of pawn customers are employed, 82 percent have a high school diploma or a GED, and 33 percent are homeowners.

No credit risk involved
For cash-poor borrowers, the lack of credit risk inherent in a pawnshop loan can be a veritable gold mine. “Pawnbroking is the only consumer credit source where if you don’t repay the debt, the only recourse is the personal property that you pledged. The pawnbroker will never go after the borrower,” says South Bend, Ind., pawnbroker Steve Krupnik, whose 30 years of pawnbroking experience led him to write “Pawnomics: A Tale of Historical, Cultural and Economic Significance of the Pawnbroking Industry.”

In the current economy, pawnshop loans can translate into lifesavers for customers whose job losses, mortgage problems or other financial straits mean they can’t buy groceries, pay credit card bills or put gas in the tank, says John Appelbaum, whose family has owned Sacramento Loan and Jewelry Inc. since 1966. “We are seeing people that we haven’t seen before. We have been buying more jewelry, gold, than we’ve been before.”

Pawnbroking: How it works
Before granting a loan, the pawnbroker will assess the property’s value and then discuss the options (borrowing against the personal property compared to selling the property outright) and loan terms with the customer. Loans are generally granted at a percentage — generally about 50 percent — of the fair market value of an item (as opposed to its original retail price). Selling the item outright means a higher payout, but often the customer wishes to keep the pawned article.

According to the NPA, contract periods vary by state, but are typically 30 days with an additional 30-day grace period. Individual states also set loan fees and allowable interest rates on pawn loans. Customers may choose to borrow less than pawnbrokers are willing to loan on items, as well as when (during the loan term) they choose to pay the loans. Read more here.