When you are facing an emergency and need cash quickly, you probably think about payday lenders and pawn shops. While both offer quick money solutions, which one is better for you depends on your current situation. Whether you have items worth pawning, when you can repay the loan, and how quickly you need the cash all matter when deciding where to head for your quick loan.
Do You Have Something Worth Pawning?
This question will decide whether you can even consider the differences between a pawn shop and payday lender. If you do not own anything that a pawn shop in your area would be able to resell, then a pawn shop is not an option for you. The best items to take to a pawn shop include jewelry, coins, musical instruments, firearms and tools. Electronics will sometimes be accepted, but only if they are the latest models with all of their original accessories. In addition to having high quality collateral, you will usually need to be able to prove that you own these items by submitting an original receipt.
Are You Sure You Can Repay The Loan?
If you cannot repay a payday loan, you may end up with overdraft fees from your bank or, in extreme circumstances, being sued by the lender to pay your debt and added fees. If you cannot pay back a pawn broker, you will lose your collateral, but that will be the end of it. There will be no more collections and you will owe nothing. If you are unsure of whether you will be able to pay back the loan but have an item you are willing to give up, a pawn broker is a safer option. If you are certain you can pay back your loan or do not have collateral, a payday lender may be a cheaper, less obtrusive way to get your loan.
How Soon Can You Repay The Loan?
Payday lenders often have different prices for loans that can be paid back within two weeks or a month. Some also offer installment loans that last up to six months. Pawn shops tend to be much more rigid in their pricing, offering only one loan for one month. While you may be able to extend the loan if you cannot pay it back in one month, it is not always guaranteed and you may end up losing your collateral. This means that if you have the ability to pay back within one or two weeks, you may pay higher fees at a pawn shop (as their shortest period is one month).
Where Will You Pay Lower Fees?
Both pawn shops and payday lenders charge significant fees for their short-term loans. Pawn shops tend to charge somewhat lower fees because they are holding your possessions as collateral, making the loan less risky for them. However, most times the difference in fees is very little.
The interest rate and fees you will pay at your pawnbroker or payday lender are usually regulated by your state, so the best way of finding out which will be more cost effective for you is to visit one of each.
How Quickly Do You Need The Money?
When you pawn something, you walk out of the store with cash instantly. While some payday lenders offer this option, most lenders are switching to a direct deposit into your bank account. Depending on how quickly your bank processes payments and what time of day you go in for a loan, you may not be able to access your money until the following day.
If you can wait a few more days for money and have an item you would like to sell, you might try selling it online or through a yard sale rather than pawning it. You are likely to get a higher price from an individual than you would at a pawn shop.
Whether you go to a pawn shop or a payday lender is a highly personal choice. However, make sure you are well-informed and prepared to make the best financial decision for you. For more information, contact a company like EZ Check Advance.