What Are Pawn Shops and How Do They Work?

Although most people have heard of pawnbroker loans, many people remain unaware of what pawn shops are and how they operate. Despite being around for more than 3,000 years, the pawnbroking industry is often misunderstood, which means that people are missing out on the range of services a pawnbroker offers. 

To ensure you’ve got all the information you need, we’ve put together a handy guide to help you understand what pawn shops are and exactly how we operate. 

What Is a Pawn Shop?

A pawn shop provides immediate loans to people who want to use assets or valuables as capital. Pawnbroker loans are fast cash loans over a short term of six months. A bit like a bridging loan but secured against valuable assets

When you visit a pawn shop, like our own shop in Ilford, you’ll be greeted by a team of experienced pawnbrokers who will assist you with your visit. If you’re considering taking out an immediate pawnbroker loan, you’ll find the expertise and assistance you need. 

How Does a Pawn Shop Work?

If you want to obtain immediate loans, you can visit a pawn shop with one or more valuable items. Perhaps you want to use a watch as collateral, for example. If so, you simply need to visit our pawn shop in Ilford and allow a member of the team to assess the item. We’ll provide a value and tell you how much we are willing to lend against the item. 

Once you’ve been given the terms and offered a loan, you’ll be free to decide whether you’d like to pawn your item. If you do, you’ll leave the item with us, and we’ll provide you with the pre-agreed loan amount.

Crucially, you don’t relinquish your ownership rights of the item at this time. In fact, you’ll be able to return and collect the item you’ve used as collateral when the loan has been repaid in full. In the meantime, we’ll house the item in a secure storage location and arrange collection following completion of the loan. 

How Long Do Pawnbroker Loans Last?

Every pawnbroker can set their own terms. Here at Maxcroft, we offer pawnbroker loans with a six month term. This gives you ample time to pay off the loan by paying the capital and the interest due in one payment at any point during the loan term . There are no early payment penalties because the loan is designed to be totally flexible and can be paid at any time within the term. The loan can also be renewed at the end of the term if it has not been convenient to pay back the capital within the first 6 month period. 

When the end of the six-month loan period is approaching, we contact our clients in writing to inform them that the loan period is due to end. At this point, you can either redeem the item you used as collateral by paying the loan off in full or renew the loan. To renew pawnbroker loans, you’ll need to pay six months of interest at the pre-agreed loan rate. If the renewal is agreed upon, you’ll have a further six months to pay off the balance of the loan and any subsequent interest that accrues.

What Happens If a Loan Isn’t Paid Off?

In the event that a client does not redeem their item by paying off the loan, we would need to sell the item in order to retrieve the amount outstanding.  If the loan exceeds £75, we return any surplus to you, once the capital, interest, and cost of selling the item has been deducted. 

Our six-month pawnbroker loan term and our renewal option ensure that the vast majority of clients can redeem their items in a timely fashion if they choose to do so. 

What Can I Pawn?

If you want to obtain immediate loans from a pawnbroker, you’ll need to know exactly what you can pawn! At Maxcroft, we lend against a wide variety of valuables and assets, including:

If you have an item of value and you’d like to know if you can be used to obtain a pawnbrokers loan, contact our team now on 0208 518 1828. 

What Are the Benefits of Pawnbroker Loans?

Pawnbroker loans let you access cash instantly, using virtually any item as security. Whether you’ve been surprised by an unexpected bill or your income is disrupted, being able to access funds swiftly can be a vital way of safeguarding your financial standing and protecting your credit rating. 

Furthermore, taking out pawnbroker loans can be far easier than applying for traditional loans from banks or building societies. With no credit checks or lengthy application procedures, it’s a hassle-free way of obtaining the funds you need, when you need them. 

What’s more – you’ll find that we offer competitive interest rates and we also enable you to pay off your loan incrementally by making optional payments to reduce the capital thus reducing the interest going forward . Every loan agreement is clearly explained and documented before an agreement, so it’s easy to see exactly how much interest will be owed on your loan. 

Of course, the fact that you retain ownership of your item until the loan is paid off or until the loan term expires is another major benefit associated with pawnbroker loans. While selling an item for cash would mean relinquishing ownership immediately, a pawnbroker loan gives you a lengthy period of time to reclaim the item while still being able to access a loan. 

With so many benefits associated with pawnbrokers loans, it’s easy to see why they’re so popular!

Taking Out Pawnbroker Loans with Maxcroft

At Maxcroft, we make it as easy as possible for our clients to obtain a pawnbrokers loan when it’s needed. With no setup fees or credit checks, anyone can rely on immediate loans to resolve their financial issues. Our office-based location ensures clients can visit us discreetly and all loans are arranged and managed in the strictest confidence. 

Are you interested in pawnbroker loans in Essex? Maxcroft has over 40 years’ experience, offers outstanding service, and issues loans against assets and valuables. 

If you’d like to discuss an item that you are considering selling, take a look at our pawnbrokers website page here.