Pros and Cons of a Pawn Shop Loan

A pawn shop loan can get you access to money when you are in need of it. This type of loan carries with it some advantages and disadvantages. Here are a few of the pros and cons of a pawn shop loan.


One of the biggest advantages of this type of loan is that it is easy. You are simply going to have to take something in that you can use for collateral and fill out some paperwork. The pawn shop is then going to give you a receipt that has the terms of the loan on it.

Another big advantage of this type of loan is that they are not going to check your credit. This is a type of in-house loan that does not depend on your credit history. The loan is secured completely by the collateral that you provide to the pawn shop. Therefore, the lender is not really concerned with whether you default on the loan or not. If you do, they can simply keep your collateral and sell it.

Another advantage of using this type of loan is that you will be able to get your cash right away. You do not have to wait for them to come up with the money or process your loan documents. They will simply give you the money that you need right away while you are in the store.

With this type of loan, if you are unable to make the payments, it is not going to hurt your credit permanently. They will simply keep the merchandise, and nothing will be reported to the credit bureaus.


One of the disadvantages of getting a pawn shop loan is that the loan term is typically very short. In most cases, you are going to get only 30 days to pay off the loan. If you need to, you can usually get an extension as long as you keep paying the interest on the loan. While you can extend a loan, this is typically a very expensive proposition.

Another problem with these loans is that the interest rates are going to be very high. In some cases, you are going to have to pay an annual percentage rate (APR) of as much as 300. Therefore, you should use this type of loan only if you are in desperate need of the money. This interest rate makes it very difficult to justify using a pawn shop as a lender.

When you are getting this type of loan, you have to provide collateral that is going to secure the entire amount of the loan. The only problem with this is that the appraisal that the pawn shop does is typically very low. This means that you are going to have to put up more collateral than you should have to for the loan that you need. Sometimes, the amount at which the collateral is valued is up for negotiation, but this is not always the case.

Need Cash Now? Get a Cash Advance