Unable to decide between a bank loan and pawn loan? Good news is you are on the right page. Here, you have all the necessary information to clear your head and pick a better loan option for you.
A bank is not the only option when you need money. There are many more options to borrow the required sum and return back according to the agreement. Banks are too rigid with their processes and protocols that not everyone can fit into their loan eligibility criteria. Fortunately, online pawn shops are available 24/7 for immediate loan approvals.
The difference in the documents required while applying for a loan
If you visit your nearest bank and ask for a loan, you have to answer hundreds of questions. You need to submit proof of your identification, bank accounts, and also the tax return proof of last year. They conduct a strict background check and credit score assessment to consider your loan application. Isn’t this a time consuming and hectic process?
On the other hands, when you visit a pawn shop for loan - all you need to do is present your government authorized identity proof and fill up the lending paper. Your loan process starts immediately as you enter the pawn shop. Moreover, you can save your time by opting online pawn shop too. Their agent visits your house for completing the process for you.
Credit Check Creditability
Banks take credit score way too seriously. Let’s say, if you apply for a loan, you have to disclose your social security number. Bank agent conducts a thorough check of your credit score and tracks your previous bank records to make a report which says if your loan is approved or not. In case you have a low score, high-interest rates are applied. This is heartless but most banks follow the same process.
Happily, pawn shops don’t go by this process. In fact, they least care about your credit score. All they want a good valued item as the collateral to lend you money. Your privacy remains intact. So if you ever get thoughts like “I want to sell my watch”, reach your nearest pawn shop and get the best price instantly without risking your confidential information.
Loan Approval Probability
Banks are too cynical about the loan applicants. They like to think of every negative point to disapprove your loan (…well, sometimes they are nice). They consider your annual income to decide if you are capable enough to pay back the money. Also, some banks will question the reason for your loan and use reason to disapprove your loan if they don’t find it acceptable. Banks are too stingy when it comes to lending money. They ensure all the aspects and approve your loan only if it fits their criteria.
Meanwhile, pawn shops like to be very crisp and straightforward. They only care about the item you will use as security and its worth. Your loan amount should be permissible against the collateral. Loan approval is never an issue with pawn shops. Besides, you can get instant approval of your loans.
In case you fail to repay a bank loan, be ready to pay late fees and receive collection calls. This fail will affect your credit score and your credibility for future loans lowers drastically. However, with pawn shop loan you put nothing at stake but your collateral item. If you are unable to pay the loan, you can always get an extension without affecting your credit score. Also, if you decide not to pay anything back, ask your pawn agent to keep the item.
Comparing both the loan options it is clear that pawn loans are flexible, hassle-free, and easily accessible. Pawn shops are different in every area and so vary their terms. Ensure to find out all the necessary things before approaching the shop. Hope enjoyed the read and given information is instrumental for you.