The market for consumer credit has been saturated by online payday lenders. Pawnbrokers are part of this market. One could even argue that they are the genesis of this market. For centuries, people have been able to turn to local Melbourne pawnbrokers in times of financial need. However these days payday loans have been giving pawnshops a run for their money. You would think that any business under such immense economic strain would struggle to keep its doors open. The truth is that there are more pawnshops doing well now than ever before. There are probably more plans to erect pawnshops than ever before. Pawnbrokers have evolved and have taken their businesses online. This has made taking out pawn loans far easier and quicker than ever before.
Pawnbrokers aren’t famous for their competitive rates. You should approach Melbourne pawnbrokers with better understanding how the process works and what the risks are. Remember, you are putting your cherished valuables on the line. The least you should expect is a fair amount of money for them. The pawnbroking industry might have evolved but the process itself is still the same. You pledge something of value for a cash loan. The pawnbroker will evaluate the item and give you the cash value. What you will get is usually less than half the market value of the item. If you agree to the terms of the loan and the loan period you get to walk out with the cash in hand and a pawn ticket. You can redeem the item once you pay the loan off within the set time period.
But what will happen if you can’t pay in time?
If you fail to pay the loan back in time, the item will be sold to recoup whatever loss the pawnbroker has incurred. Some pawnbrokers might return excess cash to the customer. Most people pay off their pawn loans, they are easier to settle quicker than other forms of loans. Unlike payday loans and other kinds of short-term loans, pawn loans can be settled faster without building up debt.
Interest rates
Borrowing from pawnbrokers can be convenient and quick, but it is not a cheap debt to acquire. You can expect interests to be somewhere around 5-10% over a 30 day period. This is still less than what payday lenders charge. The best thing about pawnbrokers is that they will give you a loan without conducting any credit check. A healthy, clear credit history is almost impossible to have and maintain these days. However, it shouldn’t be something that stops you from living your life and getting the things you really need when you need them. As long as you have something of value to pledge the pawnbroker is assured that he will have something to hold on to should you default on your agreement.
Regulations governing pawnbrokers
In most countries including Australia, pawnbroking is regulated by the FCA (Financial Conduct Authority) or some version of it. This means there are specific standards of conduct or solvency are required. For customers who feel they have been poorly treated then they may appreciate having a body that could give them the recourse they need. If you aren’t sure, find a pawnbroker that will at least give you time to cool off. 14 days is the standard cooling off time.
