Consumers need to borrow money at one time or another. Some choose a pawn loan. A bank loan. Or a credit card. Pawn shops in Lowell like Empire Loan can provide customers with the cash they need to pay the rent or an overdue bill; or extra cash to buy a car or home. Which is the best way to borrow the money you need? There are a wide range of factors that will help decide. For starters, let’s assume that if you’re trying to borrow enough to buy a home or car, you will likely need a bank, credit union or finance company. But what if you need $1,000 or less to cover your expenses? Let’s consider the plusses and minuses of Credit Cards vs. a Pawn Loan.
A credit card is like a line of credit from a bank. You can pay your expenses with a plastic card and not have to pay it back until they send you an invoice, usually after a month. Credit cards are easy to use and are accepted just about everywhere. With credit cards you can also make online purchases from the comfort of your home. Credit card companies will also allow you to pay off your bill over time, even allowing you to pay a minimal amount, making it easier to pay down the balance as you go along. Not a bad scenario.
Pawnshops in Lowell, or in any of Empire Loan’s 8 locations, would probably point out that the downside to credit cards is you need to qualify to get one. Credit card companies check your credit history through the big credit reporting agencies, verify employment, residency and other factors in determining if they will give you a credit card in the first place. In the event that they do give you a credit card and you don’t pay the bill on time, they will report that to the credit reporting agencies, affecting your credit rating and your ability to get credit from other banks. It may also affect your ability to get a job or apartment as employers and landlords may be hesitant to hire or rent to somebody with a bad credit history. One other problem with credit cards is the amount they charge in interest and fees on any balance you may have with them. Credit card companies make money on the interest they charge. If you pay only the minimum amount each month, you could end up paying many times what the original item is worth.
A pawn loan is when you bring an item of value to a pawnbroker and the pawnbroker lends you money based on the value of the item. The pawnbroker holds the item for a predetermined period of time until you come back with the principal amount you borrowed, along with any interest and fees they may charge. The only requirements are that you have something of value, along with a valid government issued ID. The interest rates and fees pawnbrokers can legally charge are set by licensed by local authorities. There are no credit checks required and no long forms to fill out. Just walk in and get the cash you need. At most of Empire Loan’s Massachusetts locations the interest rate is 3% per month. The interest rate at our Rhode Island locations is set by local authorities at 5% per month. Walk in and get the cash you need within minutes. It’s that easy!
Another plus is the fact that pawn shops do not report to the credit reporting agencies. A pawn loan will, therefore, not affect your credit rating. If your payments are late, or you don’t pay at all, your items may be foreclosed on, but it will not affect your credit rating score.
The downside to a pawn loan is that you are handing over your valuables to somebody you need to trust — which is why you need to make sure they are reputable. Membership in organizations like the Better Business Bureau, National Pawnbrokers Association and other organizations is helpful. You can also check review sites like Yelp, Google + and similar sites to hear what people have to say about them.
Credit card? Or pawn loan? Which is right for you? Now you have the information to make an informed choice.
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