Bank Loans vs Pawn Loans: What’s The Difference
Anyone can encounter unpredictable events which demand urgent access to cash. By practice, when someone requires a loan, they will typically check their credit rating and make a decision. Obviously, for those who are being flooded with phone calls from debt collectors will try to find other avenues.
A loan obtained at the bank depends solely and entirely on the individual’s credit history. A pawn loan on the other hand, is accessible to pretty much anyone who would like to borrow cash money in exchange with an item that holds value known as the pledge or collateral. With a pawn loan, the client is pledging their goods to borrow some cash with the intention of paying it back upon the agreed date plus interest. The worst that can happen here is that you risk losing your item, as if you had simply sold it off. When you have debt already and decide to borrow more and by magic your bank approves the loan, you end up finding a short-term solution to your problem but the damaging effect to your credit score can be far more outstanding. Now let us examine the advantages a pawnbroking loan can have over banks in more noteworthy detail.
There are a few advantages pawn loans have over bank loans. The one we must mention for obvious reasons is the fact that a pawn loan does not involve a credit check therefore, no potential threats towards your credit score after your paperwork is filled. This means for instance, you walked in to get a pawn loan, filled the application but along the process changed your mind, no credit reference agencies such as Callcredit or Equifax will be notified that you have requested a loan initially. In contrary to the latter, banks will make that call without a doubt to check if you’ve missed out on payments and the whole shebang! If you owe money already, bank loans will indefinitely place you in a position that could harm your credit score and the inability to pay back by creating a vicious circle of late payment charges stacking on top of each other. A pawn loan can take up to 10 minutes and you can walk out quickly with the money in your hands. Once the valuation step is complete and the assessor presents you with an agreement, the money can be handed to you by cash in respect to the value of your goods.
Confidentiality is an additional plus when you request a pawn loan since no postal service or email correspondences about the exchanges will be made. Such transaction will discreetly remain between you and your pawnbroker.
To summarize everything above, the greatest distinction between a pawnbroking loan and a bank loan is the liability in which you entail when making your request. Going for a pawn loan could jeopardize your collateral that you righteously possess. Furthermore, a bank loan could imperil your credit score or even worst, trap you into never-ending debt.