7 Reasons Why Payday Loans are Better than Pawn Shops

When you don’t have enough cash to make it to payday, there are often limited options to get the money you need. You can ask your friends if you can borrow money, but they might be in the same situation as you, and borrowing money can often strain relationships. Many people turn to pawn shops and payday lenders to make up a small shortfall in their budget. While there are merits to both types of businesses, in many cases, payday loans may be the better choice. The following are seven reasons why payday loans are better than using a pawn shop.

1. Payday Loans are More Convenient

You can apply for payday advances at any time of day from your computer. You can get a payday loan in your pajamas. If you go to the pawn shop, you have to get dressed and drive to the pawn shop. When your loan is due, you have to drive back to the pawn shop to recover your pawned item and pay the bill.

2. You Don’t Need Collateral with a Payday Loan

When you get a payday loan, your job is your collateral. No need to give up your X-Box or television until you pay your loan off. You don’t have to risk your grandma’s wedding ring either. As long as you have a job and a checking account, payday loans can get you fast money without handing over your things.

3. You Get a Smaller Loan than Your Collateral’s Value

Pawn shops have to make money. One of the ways that pawn shops make money is by selling the items that people have pawned but never could pay to reclaim. When they appraise the item that you bring in, the pawn shop will not give you the full value of your item. They will need to sell it for a higher price than they paid for it. Additionally, it costs money to store the item that is being held for you. Since you are not dealing with collateral when you get a payday loan, you don’t have to worry about how much the pawn shop owner is willing to give you.

4. You Don’t Have to Prove You’re Not a Thief

Unfortunately, thieves used to use pawn shops to get rid of their stolen goods. Most states now regulate pawn shops to prevent this practice. Pawn shops usually have to turn over the item information, including the serial numbers, to the police in order to prevent theft. Although there are confidentiality laws in place, you may feel uncomfortable with having to prove that you are honest. With a payday loan, you don’t need to give any information about the things that you own.

5. No Haggling Necessary

At a pawn shop, the broker will probably try to loan you a low price for your stuff. If you need a little more money than is being offered, you will have to have another item to pawn or haggle for the difference. With a payday loan, you can get the amount that you need, and you don’t have to haggle for it. Just indicate the amount you need when you take out the payday loan.

6. You Don’t Have to Keep Track of Pawn Tickets

When you pawn an item, the pawn shop will give you a pawn ticket. You will use this to reclaim your item when you pay back your loan. You will need to keep your pawn ticket in a safe place. While pawn shop brokers will keep your information for their records, they may charge you extra money if you lose your pawn shop ticket. With a payday loan, there are no pawn tickets to keep track of.

7. Payday Loans Don’t Include Extra Fees

In general, when you take out a payday loan, you pay a set amount of interest for the amount of money that you borrow. At a pawn shop, not only do you need to pay the interest on the item that you are pawning, but you might also be charged additional fees. These fees are often necessary to pay for someone to appraise your item, submit the information about your item to the police database, and store your item. Some cities are also imposing additional fees for each individual pawn transaction to help pay for the police resources that they use when they deal with pawn shops. When you deal with a payday lender, you don’t need to pay for any of these fees.