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Original poster

Your thoughts on pawn shop loans

11 replies

wdididothis · 30/10/2023 17:19

We are going through a tough period where we are finding it hard to meet our costs as a family due to the cost of living. We have average credit but not amazing. I have recently taken some jewellery and brand watches to an established pawn shop franchise and been given a quote for a loan against them. It is all appearing straightforward, and I know that we will be able to pay back the loan with interest in the time frame needed as my H and I will both receive a payment in December which more than covers it.

I have never done this before so I wondered if there is something missing or that I am not seeing? Or if it's generally believed to be unsecure or the worst way to be leant money. What should I watch out for?

OP posts:
TravellingSpoon · 30/10/2023 18:40

What is the APR on the loan on these items? I bet its insanely high.

If you are due a payment in december can you not last until then, cut your outgoings to the bone?

Parakeetamol · 30/10/2023 18:42

If you're willing to part with them then sell them properly and be done with it.

Brahumbug · 31/10/2023 06:42

If you are happy with the repayment and can afford it, plus you don't want to permanently lose the items by selling them, then go ahead.

BarbaraofSeville · 31/10/2023 09:05

TravellingSpoon · 30/10/2023 18:40

What is the APR on the loan on these items? I bet its insanely high.

If you are due a payment in december can you not last until then, cut your outgoings to the bone?

APR isn't really an appropriate consideration for short term loans.

If I lent you £100 today and you gave it back to me in a couple of weeks and bought me a small token costing £5 to say thank you, if you worked the cost out in APR terms it would be hundreds/thousands of percent.

Pawn shops can actually be a cost effective way of borrowing in the short term, they've just fallen out of favour a bit due to the availability of other credit.

For the OP, if you're happy with the cost, it's essential that you borrow the money, and you're as sure as you can be that you can pay it back on time, it's not the worst idea in the world.

takemeoutonight · 31/10/2023 09:08

The thing is you might not see your items again as they can be sold once you hand them over. So it comes down to how comfortable you are with that idea. If you are ok with that then as someone else said you would be better off just selling them properly rather than messing around with pawn shops. They are not a good way to deal with things unfortunately.

BarbaraofSeville · 31/10/2023 09:14

Surely they can't be sold unless you don't reclaim them at the end of the agreed period? If you pawn something for a month, the agreement is that you buy them back after a month and if you don't do that, then the item can be sold.

FrangipaniBlue · 31/10/2023 09:16

takemeoutonight · 31/10/2023 09:08

The thing is you might not see your items again as they can be sold once you hand them over. So it comes down to how comfortable you are with that idea. If you are ok with that then as someone else said you would be better off just selling them properly rather than messing around with pawn shops. They are not a good way to deal with things unfortunately.

This isn't true.

The items are held until your loan repayment due date.

Only if you don't go back and collect/repay the loan on that date can the items then legally be sold on.

KnickerlessParsons · 31/10/2023 10:03

Would it be cheaper/easier to ask your bank for a short term overdraft?

takemeoutonight · 31/10/2023 10:18

@FrangipaniBlue I stand corrected, thank you for replying to me. Every day is indeed a school day Smile

CrabbiesGingerBeer · 31/10/2023 10:19

takemeoutonight · 31/10/2023 09:08

The thing is you might not see your items again as they can be sold once you hand them over. So it comes down to how comfortable you are with that idea. If you are ok with that then as someone else said you would be better off just selling them properly rather than messing around with pawn shops. They are not a good way to deal with things unfortunately.

Not in a reputable pawn shop.

There is a list of pros and cons at https://www.moneyhelper.org.uk/en/everyday-money/credit/pawnbrokers-how-they-work which looks fairly accurate.

Pawnbrokers | MoneyHelper

Pawnbrokers let you borrow money in exchange for your valuables. You can either choose to sell an item or agree to collect it once you've repaid the loan.

https://www.moneyhelper.org.uk/en/everyday-money/credit/pawnbrokers-how-they-work

OrderOfTheKookaburra · 31/10/2023 22:09

It's not a BAD idea if you're absolutely sure your financial problems are short term.

It's certainly better than utilising Afterpay/Clearpay etc for everything else to free up money to pay whatever it is needs paying.

And better for your credit rating than overdrafts etc.

The problem is if you don't pay then the value of the jewellery that you will lose out on is incredibly high.

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