There's a right way and a wrong way to get a pawn shop loan. There's also a right time and a wrong time. Here, we're going to tell you how smart people get pawn shop loans – about the right way AND time.
But first, let's consider why you're getting a loan from a pawn shop.
Hopefully it's for the right reason.
For instance, perhaps you're late on your apartment rent and need some fast cash to pay off your debt. Or maybe you need to pay the gas bill so you can cook and eat things other than canned food. Or maybe you're starting a new business and need some money to pump into it. These are all good reasons to get a loan, as long as you believe you can pay it back within the time the pawn shop gives you.
You don't have forever to buy your collateral back from the pawn shop. This is why you need to make sure the time allotted by the pawn shop for buyback is sufficient.
Do it the Right Way
The only reason you're loaning instead of selling is because, eventually, you want to get your piece of collateral back. If you don't care about it, or don't need it, you can just sell it. There's no point in taking out a collateral loan from a pawn shop if you don't intend on getting the item back. If it makes no difference to you whether you own the item or not, just sell it. Don't waste your time with the loaning process.
However, if you know you want to keep the item for yourself or someone else, make sure you're positive you'll have the money in time. Since pawn shops only give you a limited time to buy back your collateral, it's not wise to take out HUGE loans. Only take what you need and don't get greedy.
If you get smaller loans, or loans within your means, you have the greatest chance of getting your collateral back without complication.
In addition to doing it the right way, make sure you keep your loan receipt. This prevents a world of future hassle when you go to buy back your collateral.
Do it at the Right Time
When you need money, you need it. And when you're making just enough to get by, it's hard to put a timestamp on cashflow. But just because you can't judge your cashflow doesn't mean you can't have control over when you take out a pawn shop loan.
Although it's tempting to give something valuable up (a car?) for a wad of cash, it's unlikely you'll pay it all back ... unless you know you're getting paid a substantial sum, within the allotted time the pawn shop gives you.
In this case, if you ABSOLUTELY needed money NOW, it would be the right time to make that decision. On the other hand, if you weren't expecting a large cashflow to buy back your collateral, the time wouldn't be right. Since you probably need your car to get to important places, basing a loan on it is not worth the risk.
Instead of asking for a loan, maybe it's a better time to sell. And if one item won't cover your debt or expenses, try selling several things. Things you can live without. Taking out a pawn shop loan smartly is all about timing and prediction. If you can strongly predict you'll pay off your loan in the allotted time, getting a pawn shop loan may be a good idea for you.