Before you pawn an item, there are five simple questions you need to ask.
Why? Why not just barrel in without the answers?
Taking a deep breath, looking at the situation, and making a thoughtful decision before going through with a pawnshop loan can save you time and hassle. Even if money is tight, you shouldn’t approach loans in a way that you’ll regret. As a plus, choosing the right timing can help you get a better loan!
Make sure to tick off these five questions before pawning your stuff.
Questions to Ask Yourself
Can I Live Without This Item?
While this can also be a literal question (don’t try pawning your medication – that’s illegal), this question should be asked more generally.
If you can’t get your stuff back, will you regret it? Did it have sentimental meaning? Will losing it make you feel like your life is lesser without it?
Even if you’re indecisive on the answer to this question, asking it will let you examine why you like it or would like to keep a certain item. It’s better than deciding it after the pawn!
How Much is This Item Worth?
You may need a certain amount of money from a pawnshop loan. So, you need to pick the right item to get you what you need.
If you need a hundred dollars to tide you over until the next paycheck arrives, pawning a TV you bought three years ago might only fetch you fifty dollars at best.
When Am I Expecting Money?
If your goal is to pay back the loan and retrieve your collateral, ask yourself: when will you get your next paycheck, how much is that paycheck, and how much do you have to pay off the loan once you subtract your expenses (like rent, food, and transportation costs)?
Figure out how quickly you can pay back the loan. From there, you can decide whether or not pawning your item is a safe bet.
Questions to Ask the Pawnshop
How Long Do You Have to Repay the Loan?
Know the terms of your contract with the pawnshop. You need to know how long you have to pay back your loan in order to retrieve your collateral.
The last thing you want is to finally scrape together the money, head to the pawnshop, and realize that you no longer have claim to your item. If it’s already sold or is being sold for more than the money you owed, you’re out of luck.
What is the Interest Rate?
Loans aren’t free, so you’ll need to figure out what the interest rate is from the specific pawnshop you’re going to apply to.
This will also help you calculate how much you’ll eventually owe. Better yet, it can let you shop around and see if there are other pawnshops in the area with lower interest rates. Don’t just go for the first option – find the best option for you. Otherwise, you’ll pay more later.