Taking money from financial intuitions today is a widely-spread practice. People take money for traveling, making small investments, buying furniture, or supporting business. The reasons why you might need money are various. This is why banks have come up with new programs and types of loans. A payday loan is one of these types. It is popular among those, who need smaller amounts of money. At the same time, when being in need of quick cash, people go to a pawnbroker shop. What is the difference? Are payday loans better than services of pawnshops?
The Major Differences between Financial Institutions
- A pawn shop is a place where people come when they need quick cash. In order to get it, they bring something valuable. Items that have value and can be of interest to the shop. You can either sell it or put it in temporary possession. In such a way, you get cash. Pawnbroker shops also buy used items but they buy it at a relatively lower price. In other words, you have to bring something in order to get cash. When asking for a payday loan in the bank, you do not have to sell anything or pawn. You prepare a short list of documents verifying your credentials.
- Experts recommend checking the value of items you are planning to bring to a pawnbroker before doing it. Pawn shops frequently offer a much lower price even for new items. They are also doing money. Clients usually get around 40-60 percent of the real value.
- Sometimes it is better to sell the same items on the Internet rather than go to a pawnshop. Of course, it might take some time but, at least, you will get more money. When taking a loan, clients do not have to bring anything but they pay interest on using the money. The interest in payday loans is usually small, and that is what makes this type of loans popular.
- If you are planning to get back your items from a pawnshop, you will have to pay certain fees too. It might include storage fee, insurance, or lost receipt. In the end, the amount to return will be much bigger than borrowing from the bank.
- Pawn shops will definitely work with you unless you bring low-quality items. In other words, you will get some cash anyway. It might not be a huge some but it might help too. The situation is a bit different from the bank. You might not get a payday loan with a bad credit history. If the financial institution finds you a doubtful client, you will be denied, no matter how much you ask.
Whether to take a loan in the bank or go to a pawn shop is a decision that one should make individually. Both options have benefits and drawbacks. Consider all aspects carefully before making a final decision.