How Do Pawn Shop Loans Work?

Have you stopped by the gas station lately to get gas? Oh my. You may have to obtain a pawn loan or sell your valuables to a local pawn shop to make ends meet. The cost of living compensation at work is not going up as rapidly as the cost of necessary goods like food, clothing, gas, and shelter.

Things Are Changing, and Pawn Shops Might Be Your Best Friend

In 2008 we complained because the average cost for a gallon of fuel reached an all-time high at $4.17 a gallon, and today people have sticker shock with the price being $5.79 a gallon. Pawn shops may become our best friends as they help tie us over during economic uncertainty.

Russia and Ukraine

A few things contribute to the upheaval of prices, the spot price of gold and precious metals, and the general concern over the economy.

There is no denying that the Russia – Ukraine upheaval impacts us. Being a part of NATO, the United States has sent military troops over to Poland, Romania, ammunition, small arms, and other defensive weaponry to Ukraine.

Interest rates

The federal reserve bank interest rates are now higher. Experts say that the U.S. Central Bank will raise interest rates this year to the most since 2005, and it’s estimated the interest rates will go up six times this year.

Major commodity prices

Major commodity prices go up daily. Supply and demand are the keys, and the cost of production, transportation, and delivery influences the price we all pay at the checkout stand.

Man buying gold jewellry, pawn shop and us dollar banknotes

Pawn Shop Services During Times of Uncertainty

How will people get through? Pawn shops have offered pawn loans pawn buying services and have retail storefronts with valuable items at reasonable prices for years. Pawn shops are a community financial resource.

Some people can’t go to a bank or credit union to get a short-term loan because they have debt collectors and a poor credit score. They can’t qualify for a personal loan, and payday loans are expensive and seem impossible to pay back without getting behind again between the next payday.

If you have to borrow money, it may become an issue for some people because the federal interest rates increase, and so will the cost of personal loans. Lenders will be more selective about who they finance. Personal finances may not be enough to repay a loan while getting the household good needed to provide for a family. In general, expendable money will be less. Some people may need assistance in a different form, like a collateral loan from a pawn shop.

What is a Collateral Loan?

A collateral loan is a secured loan. Collateral is an item or thing that’s value exceeds the amount of the loan you are requesting. Loan amounts can vary as much as the appraised value of different personal things you may want to pawn.

For example, a car you have a clear title on and are willing to leave at a pawn shop will bring more than tools from your garage.

Pawn shops consider all valuable items like diamonds, gold, gold coins, musical instruments, name brand tools, gold jewelry, old broken gold or silver jewelry, fine jewelry, diamond ring power tools, hunting equipment, etc.

A collateral loan uses the value determined through an appraisal completed by the pawnbroker. Once the pawnbroker can figure out the value of your item, the amount is used to guarantee the loan until the amount is paid back. Once the loan is paid in full, you can get your item back.

Collateral Loans vs. Selling Outright

Collateral loans are outstanding for people who don’t want to sell their valuables outright. Maybe you inherited some gold coins and would like to keep them, but you need quick cash now. Typically the pawn loan will be short-term, and you can get the money you need right away. Repeat customers may get a discount because of their loyalty.

If a collateral loan isn’t paid back, the valuable personal property is forfeited and sold in the pawn shop’s retail store to recoup the money lent. There is no reporting to credit bureaus because the value of your item covered the loan amount, so you won’t have to worry about a future credit check being affected.

The pawn shop becomes the lender, and there are no hard feelings if you can’t pay off your loan amount as you planned. Pawnbrokers understand that life gets in the way, and sometimes the only option you had was to borrow money with the intent of paying it back, but things changed. Pawn shops are in the business of providing financial products through pawn loans to their customers.

The interest rates that pawn shops charge the borrower are higher than other loans. However, the loan amounts were not meant to be long-term loans that rack up interest charges. Pawn loans are short-term in nature to meet the need for fast cash. A person who decides to borrow money from a pawn shop pays for fast cash, no questions asked.

Cash with gold jewelry on top

Gold Might Be an Option

With gold prices being the highest it’s ever been to date, using gold for a collateral loan or to sell outright might be an option. Some people have held on to a few gold coins as if they were an insurance policy against inflation. With the current price of commodities, selling any of your gold coins might be an option to get ahead or tie you over with such high prices.

Luxury Items Might Be an Option

Maybe you have a valuable property like a Rolex or a diamond engagement ring you don’t mind parting with to help meet ends. You can decide to sell these valuable pieces of property outright or have a pawn shop write up a pawn loan. The pawn industry is accustomed to giving an offer based on the appraisal of your property for either a sale or loan. You have to make sure the value of your property is equal to the loan amounts or quick cash you need.

Spot Price of Gold

Gold prices are determined by the spot price, which is dependent on the current market value of gold. This is called the spot price of gold. It is determined by supply and demand in the market and fluctuates daily. The spot price of gold is based on one troy ounce of .999 percent fine gold deliverable on the spot. Some premiums or fees have to be paid in addition to the spot price.

Pawn shops and other online companies buy and sell gold and gold coins.

Pawn Shop Retail Stores

After you get through your financial situation, you may be ready to purchase different items like a diamond ring, musical instruments, luxury watches, name-brand tools, electronics, or other items.

Pawn shops typically have a retail showroom, and some have online stores. Pawn shops have a large revolving inventory of items people can purchase. If you are working on a project and don’t want to buy expensive tools to finish the job, a pawn shop may have the tools you are looking for at a reasonable price.

Pawn shops have excellent items in good working order sold at a lower cost than brick-and-mortar big box stores. They will even write a pawn loan on another thing to help cover the cost of an item you want to purchase but don’t have the cash until later. When your money comes in, you can pay off the collateral loan.

Payday Loans vs. Collateral Loans

Payday loans are different than collateral loans because payday loans need to be paid back by your next payday. This can cause a revolving cycle of borrowing against your next paycheck and not having enough to cover bills after you pay the payday loan back. You have to take out another payday loan to make ends meet.

Collateral loans are short-term but can be extended if you pay the interest in full. You have a reasonable monthly payment set up to pay back the loan over time while keeping your paycheck.

Did you know that pawnshops have been in business for thousands of years and are found worldwide? They are a financial solution.

About 11,000 pawn shops in the United States create options for people needing quick cash. Texas has the most pawn shops in the U.S. Nearly 30 million Americans use pawn shops every year, securing loans using their property as collateral.

With 30 million people using pawn shops every year, you don’t have to feel embarrassed or uneasy about visiting a pawn shop and securing a pawn loan. People who think that pawn shops are a negative place are genuinely missing out on discounts’ financial options, and items.

In some people’s minds, pawn shops are dark, dreary places run by icky people who meet with desperate customers, and this is not true. Pawn shops are reputable places with honest, straightforward business practices.

Pawn shops provide a financial option in many communities.

You Don't Need to Be Embarrassed

Sometimes people are embarrassed to have to pawn their valuable items, which is understandable, but there is no need for embarrassment. Pawnbrokers provide a service to their communities by offering collateral loans, and customers can expect discretion and they will walk away with their dignity intact. 

Did you know that most pawn shops are locally owned and pride themselves on customer service? Pawnshop professionals attend regular training to learn more about the items they take in and sell. They also work as a team to create a confidential process that accents integrity.

Pawn Shops provides a place to sell unwanted items and get needed cash. Did you know that an average pawn shop loan is about $150 and it is repaid in about 30 days according to the National Pawnbrokers Association.

Western Loan and Jewelry

Serving clients in East Los Angeles, CA our professional and friendly team is prepared to help meet your needs. With over 50 years of experience, we can assist you whether you are looking to sell, put up items as collateral for a loan, or buy new & previously used items at an affordable price. It is our goal to make the loan & purchase process as quick and easy as possible.

We want our customers to know they are safe we are a fun place to visit.

We are a California Pawn Association (CAPA) trusted lender. We have a quick and straightforward pawn loan process and pride ourselves on discretion, professionalism, and kindness. We are a pawnshop invested in the community.

Come check out our retail floor for those unusual items or items you may be looking for at a lower price. Chose to “opt-in” (subscribe) to our discount programs, and you will know firsthand about sales, deals, coupons, and inventory. Our team is here for you.


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