Pawn shops have been serving customers for hundreds of years, providing their customers with small, short-term cash loans to help them out in times of need. Whenever people or businesses run into emergency situations where they need cash pawn shops are there to provide the aid that they need. This system has always been effective for both pawn brokers and their customers as both parties typically understand and are satisfied with what the other provides. Pawn brokers must adhere to numerous local, state, and federal business regulations, and because of this customers feel much more comfortable when doing business with pawn shops. Recently, some brokers have started offering online pawn loaning services and this has created many issues within the industry.
Issues With Online Pawn Loans
Historically, the pawn loan business has always been a live interaction business where the borrower meets with the pawn broker and the terms of the deal are worked out during face-to-face interaction. By doing business this way both the customer and the pawn broker are able to build a trusting relationship with one another and there are no misunderstandings about the terms of the deal. The practice of issuing online interstate pawn loans however, threatens this type of trust based business and presents many new problems that do not exist with face-to-face transactions.
- Because the pawn loan is done via the internet and not a face-to-face meeting there is a much greater chance of misunderstandings between the two parties. Your collateral’s value, the interest rates, and terms of the loan could all be more difficult to negotiate and understand when limited to web communication.
- Online interstate pawn loans are often made with exceptionally high interest rates. Credit card loans usually charge 2% monthly interest rates and pawn shops usually offer 3-4% per month. Online pawn shops however, usually operate with interest rates at around 3-6% a month leaving you with annual interest rates of 36 to 72 percent. When using online intestate pawn loans you have less control over important details like these.
- Pawn brokers who offer online loans are much more likely to disregard rules and regulations that typical pawn shops adhere to. Because their business is conducted online these brokers believe that it is easier to work around regulations which, once again, means less control for you the client. The National Pawn Brokers Association certifies a large number of brick-and-mortar pawn shops, but they are more skeptical to certify online pawn brokers because the lack of regulatory control over them.
- Determining where exactly your collateral will be stored is another issue with online pawn loans. When doing business with a pawn shop they will likely be able to show you exactly where your goods will be stored, but with an online loan your collateral could really be stored anywhere.
- There will be some lag time between when they get the collateral and when you get your money. Because your collateral has to be shipped cross country and then inspected by the pawn broker it will take some time for you to receive your loan money. When you visit a pawn shop they will give you cash for your collateral that same day. With online brokers, even when they have received your collateral they still have to mail you back a check. All in all, the mailing back and forth process means it could take weeks for you to get your money.
- Redeeming and then receiving your collateral is also more difficult when using online interstate pawn brokers. Once you are ready to pay off the loan and receive your collateral back you will have to get in contact with the broker and determine how the payment should be made. You then have to figure out how they will return your collateral and you will have to wait some time for them to ship you your collateral.
With all of these credibility, time, and security issues that are inherent with online interstate pawn loans you may find that is much more convenient and secure to visit a trustworthy pawn shop in your area. At South Bay Jewelry & Loan we offer our customers the best prices and fairest terms on their collateral loans. Our highly trained loan specialists can appraise your items and give you your cash within 30 minutes, making the process as easy as possible for you. All collateral is stored in our secure storage facility until you are ready to reclaim it. Come down today and see how the professionals at South Bay Jewelry & Loan can help you out with all of your collateral loan needs.
