Pawn shop options are a great source of cash in an emergency, especially for those who don’t have access to traditional credit. While a pawnshop can provide some much-needed liquidity, it’s important to understand your options and choose wisely.
In a pawnshop, you can either sell your item outright or pledge it as collateral on a loan. When pawning an item, the pawnbroker offers you cash for your item based on its value. You can then redeem your item at a later date by paying back the cash you received plus finance charges, which vary by state.
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Typically, authentic, high-quality jewelry yields the highest cash offer at a pawn shop. However, even these items will be significantly less than what they would cost new. It’s also worth mentioning that pawnshops factor in the likelihood that they won’t get their money back into the sale price. So, if you’re not interested in getting your item back, it might make more sense to just sell it.
If you are unsure which option is best, Maxferd recommends considering how long you’ll be able to keep your item before deciding. It is also important to remember that pawning an item does not affect your credit. While it may seem tempting to pull from your personal savings, doing so could put you in an expensive cycle of pawning and repaying. A better alternative is to use a short-term credit card instead. Using this type of credit can help you establish a better payment history and avoid future debt.