If you’ve ever seen shows like Pawn Stars, you might be thinking about pawning some of your possessions for some extra cash. After all, on that show, the pawn shops are full of fun, colorful people with fascinating items to sell. However, you need to remember that while the people who go on TV have thousand-dollar antique paintings, your possessions are probably more along the lines of an old TV. While you probably can’t count on a huge cash intake from heading to the pawn shop, there are several pros and cons to pawning your goods.
Pro: Fast Cash
When you go to a pawn shop, you’re able to get your money that same day. You go in, the pawn shop owner appraises your goods, and you get to take home some cash.
The money that you get from the pawn shop won’t necessarily be the amount that you have to pay back. They often will charge you a very high interest rate, which will make it harder for you to pay back your money.
Pro: No Credit Record
When you pawn something, if you are unable to make good on your loan, the pawn shop will not report the loan as defaulted on your credit report. That can be helpful if you’re working on building credit.
Con: You Can Lose Your Possession
The reason why a pawn shop won’t affect your credit is that the shop has your possession as collateral, and if you default on the loan, they’ll simply keep your possession and sell it to someone else.
Pawn shops can be a good way to get a little extra cash, but they carry risks as well. Since there’s no guarantee that you’ll be able to keep the item that you pawn, you probably should avoid pawning something that you really care about. Plus, they’re not the best way to get large sums of money.
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