When you pawn an item in exchange for a loan at a pawn shop, you’re accepting what’s known as a secured loan. This means that the money that the pawn lender is giving to you is secured by the value of the item that you’re putting up as collateral.
If you’re considering pawning an item, you may be wondering what impact your pawn loan will have on your credit score. After all, it’s very important that you maintain a good credit score throughout your life. You may also be worried that a low credit score will impact the terms associated with your pawn loan.
The good news is that you won’t damage your credit score at all by accepting a pawn loan. However, you won’t be improving your credit score either. Because pawn loans are secured, they have no bearing on your credit score whatsoever.
There can sometimes be confusion between pawn loans and payday loans. It’s important to know the difference between the two, so that you know which lending product is right for you. Here are some of the key points that distinguish pawn and payday loans from each other, including the way they impact your credit score:
Pawn loans offer longer payback times.
Most pawn shops offer much longer payback times compared to payday lenders, who usually demand fast repayment of the loan. Each state regulates payback periods differently, so it’s important to talk to your local pawn broker about their terms and conditions.
Pawn loans don’t affect credit score.
Pawn loans will never, ever impact your credit. If you fail to pay back your loan, then the pawn shop will simply reclaim your item. This means you don’t have to worry about wrecking your credit if something comes up and you can’t keep up with the payments.
Pawn loans have lower interest rates.
Compared with payday loans and other rapid lending products, pawn loans have dramatically lower interest rates. This is because issuing the loan is less risky for the pawnbroker. Even if you can’t repay the entirety of the loan, they still have your pawned item or collateral.
Pawn loans will never be sent to debt collectors.
Unlike payday loans or even bank loans, you’ll never be sent to a debt collector if you default on a pawn shop loan. This is because the pawnbroker already has your secured collateral on hand. If you aren’t able to pay, your local pawn shop will simply claim and sell the item that you’ve put up to secure the loan.
Need some quick cash? Remember the Alamo, on Transmitter Road in Panama City! We provide quick confidential loans on just about anything of value. Ask about our VIP loans for small businesses, or individuals with high net worth in need of a quick cash loan! Special rates apply to VIP loans.
At Alamo Pawn Shop in Panama City, pawn loans are a quick and easy way to borrow money without a credit check or hassle. Loans are based on the value of your collateral, not your credit rating or pay schedule. A typical pawn loan has a term length of 30 days, plus a 30-day grace period. If you cannot pay back your pawn loan in full, including any applicable grace period, we offer extensions to give you extra time. You may also choose to surrender your collateral as payment in full. Stop by our shop or give us a call at 850-872-0700!