Why would someone go to a pawnbroker to get a loan?
Response: Pawnbrokers offer the consumer a quick, convenient and confidential way to borrow money. A short-term cash need can be met with no credit check or legal consequences if the loan is not repaid. A customer receives a percentage of the value the pawnbroker believes the collateral would bring in a sale. Although the loan to collateral ratio varies over time across pawnshops, a loan of 30-50 percent of the resale of the collateral is typical. Pawnbroking imposes a discipline on the borrower that other lenders do not. Pawn loans do not cause people to overextend credit or go into bankruptcy. When a customer pawns an item, terms of the loan are printed on a pawn ticket that is given to the customer. The ticket also has other information such as the customer’s name, address, type of identification provided to the pawnbroker, a description of the item, amount borrowed, maturity date, service charge and amount that must be paid to redeem the item.
