It will be more profitable to take a personal loan online than to seek help from a pawnbroker.
There can only be two reasonable reasons for taking out an online payday loan. First, if you invest that money in something that will pay back many times the cost of the loan. The second is the occurrence of force majeure, the consequences of which you cannot overcome without a personal loan.
Unfortunately, even highly organized and financially disciplined people are not immune to basic mistakes, accidents, and twists of fate. Together with our experts, we decided to figure out what to do if a small amount of money was needed unexpectedly and urgently. It will be more profitable to take a personal loan online than to seek help from a pawnbroker.
Pawnbroker Loan Advantages and Disadvantages
In our psychology, the association is firmly established that only people in desperate circumstances turn to pawnshops. Lying in Heirlooms or a Work Laptop: What Could Be Worse? It is always worth considering an online payday loan.
Cooperation with a pawnbroker can be very mutually beneficial. Naturally, subject to all the conditions for granting a loan including an online personal loan. The first and most important advantage of pawnbrokers is that they will not require any confirmation of creditworthiness as may be the case when receiving a payday loan in a bank without registration or even an identification code. Plus, you can even calculate a title loan using a title loan calculator at MoneyZap, if you need a loan for a very short period. To obtain money, all you have to do is provide a cash deposit and an identity document: internal passport, driver’s license, international passport, military identity card, or any other document where your full name is indicated. There must be a photo and a signature with the seal of the official who issued this document.
The second advantage is speed. No credit committees! Everything is decided directly at the pawnshop’s office. They will tell you immediately whether or not they will give it away and if so how much. Then the customer makes the decision. After all, the cost of pawnshop money is quite high: from 0.3% to 1.5% per day. That’s 109.5-547.5% per year. For comparison, even the most expensive pre-payday bank loans will cost 60-80% per year. Still, it will hardly be possible to get a loan for a year in a pawnshop.
The average loan term for these financial institutions is around one month. The maximum borrowing period for taking out a personal loan is approximately 3 months. It is only offered by major pawnshop chains.
Splendid promise to the pawnshop
Most often, pawnbrokers accept jewelry, silverware, gold bullion as collateral. When it comes to simple gold products or bullion, most pawnbrokers directly on their websites tell you how much money they are willing to give on the security of 1g of “yellow” metal. Over the course of the year, this figure has increased by several dollars. If you’re going to drop off an exquisite gem-encrusted piece of jewelry, don’t expect to get a fair price for it. Pawnbrokers are not yet allowed to trade in jewelry but only sell them for scrap.
Therefore, they are rated accordingly based on weight. There may also be problems with the laying of objects made of platinum, diamonds, emeralds. Many pawn shops simply do not have appraisers (as a rule, they are part of large network pawn shops). If there is still an appraiser in the pawnshop, then on jewelry security you can get 50-70% of its value. This is due to the fact that the market for gemstones is somewhat limited. Therefore, it can be difficult to sell them further for pawnbrokers. In this case, the online personal loan wins.
Online payday loan or pawnbroker?
Many people have more than once found themselves in a situation where the money is needed in a few hours. It’s good if you have relatives or friends who are ready to lend you a shoulder at any time and lend you money “until payday”. If this does not concern you, then each time you find yourself in a similar situation. You need to look for a lender to take a online personal loan.
Some of the most popular lenders are pawnbrokers and microfinance organizations that can lend you money or a payday loan. The conditions for obtaining a loan from these organizations are fundamentally different. Therefore, before making a choice, carefully weigh the pros and cons of both lenders when taking out a personal loan online.
Loan in a pawnshop: what is the problem?
A pawnbroker is a point of issuing loans secured by a property. This property is the main disadvantage of pawnbrokers. To get a loan, you will have to give (even temporarily) something of value. Can be used as collateral:
– valuable jewelry;
– precious metals in ingots;
– precious stones;
– collectible coins, weapons;
– precious alloy rewards;
In addition, you will have to entrust your property to a stranger. Its value must exceed the amount of the loan by at least one third. In some cases, the assessed value of the collateral must be twice the value borrowed. Few people are satisfied with such conditions. So, other people are increasingly turning to microfinance organizations and getting payday loans online on better terms.
Benefits of microcredit
Microfinance organizations (MFOs) are companies that lend to borrowers without requiring the provision of collateral. These companies appeared on the loan market relatively recently, but deservedly managed to gain popularity. Microfinance organizations operate according to a simplified scheme. To apply for a personal loan online, simply fill out a form made up of simple fields. By taking out a personal loan from an MFI, you can get money on any bank card. Most MFIs grant a loan within 10-30 minutes. To receive money, you don’t have to leave your home, as payday loan services process applications online.
There is another advantage to applying for a personal loan from an MFI. If it is impossible to repay the debt on time, you can “negotiate” with the MFI. Most pawnbrokers, in the event of a delay in repaying the debt, do not make a ceremony and immediately put the property up for sale. Microfinance organizations offer the possibility of deferring payment or extending the term taking into account the current situation of the borrower. At the same time, the MFI can increase the loan rate but you will not lose your property and can return the money to you as soon as you have it.
The main advantages of MFOs over pawnbrokers can be formulated as follows:
– no need to pay a deposit;
– the most simplified loan scheme;
– the efficiency of the processing of applications;
– the possibility of obtaining a home loan;
– a more loyal attitude towards the borrower.
So, taking out a payday loan online is more cost-effective and convenient than giving a valuable piece of jewelry, gear, or a grandfather’s reward to a “foreign uncle.” The MFI transfers money to any card within half an hour and does not require confirmation of the creditworthiness of the borrower. What else could be easier?
About the Author:
Frank Glemstone – Frank is a graduate of the Masters in Economics program. He has written numerous articles on personal finance and wealth. Working as a senior author for MoneyZap, he is now with clients across the country, helping them achieve their financial and personal goals.
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