When you are in a bind and need cash fast, there is one person you can go to who can help. No, not your mum or your dad, or even your friends — money and family or friends rarely create a great combination. In most cases, that person is a pawnbroker.
Pawnbrokers will lend you money in exchange for an asset such as jewellery, antique, or anything of value — without doing any kind of credit check. A pawnbroker can also buy the item from you.
You go in with your valuable item. The pawnbroker values it. You sign a contract detailing the terms of the credit agreement, if you decide to get a loan. You are then given a period in which to pay back the loan and reclaim your asset, with the corresponding interest, naturally.
But not all pawnbrokers are above board with their business; some are scrupulous enough to give a significantly lower value for your asset to get a bigger profit when it is sold off for a much higher price than you got for it. Some will also ask for much higher interest rates than other pawnbrokers.
To prevent from getting duped or “robbed” of your valuable asset, here are some things to consider.
- Choose your pawnbroker well – there are different types of pawnbrokers; some will specialise in certain items like antiques and luxury goods (e.g., high end watches and art) and others will simply have a variety of valuables they can take on or buy, like musical instruments, digital gadgets, gaming consoles, and the like. Also, look into the pawnbroker’s reputation.
- Know the actual value of your item before taking it to the pawnbroker – it helps to have the right information so that you do not just nod your head and say “OK”, or argue with the pawnbroker. Know the value of your item, in its existing condition, and you will get the right loan or the right price for it.
- Make a decision if selling might be a better option to getting a loan – before you settle for a loan agreement, figure out if your ability to repay the loan against the value of the asset to you. If selling is not in the cards because the asset holds special value, then make sure you can repay the loan in agreed period.
- Always bring your asset to the pawnbroker in the best possible condition – OK. So your antique pocket watch is old and has been gathering dust. Just because it’s old does not mean it should look old when you’re trying to get a loan for it or sell it. Before you take it in to the pawnbroker, give it a good clean. You cannot get a proper price for it if it looks worn out.