It will be more profitable to take a payday loan online than to seek help from a pawnshop.
There can be only two reasonable reasons for taking out a payday loan online. First, if you invest this money in something that will repay the cost of the loan many times over. The second is the onset of some kind of force majeure the consequences of which you cannot overcome without a payday loan.
Unfortunately, even very organized and financially disciplined people are not protected from elementary mistakes, accidents, and blows of fate. Together with our experts, we decided to figure out what to do if a small amount of money was unexpectedly and urgently needed. It will be more profitable to take a payday loan online than to seek help from a pawnshop.
Loan at the Pawnshop Pros and Cons
In our psychology, the association is firmly entrenched that only people in a hopeless situation turn to pawnshops. Laying in heirlooms or a work laptop: what could be worse? It's still worth considering a payday loan online.
Cooperation with a pawnshop can be quite mutually beneficial. Naturally, subject to all the conditions for providing a loan including a payday loan online. The first and most important advantage of pawnshops is that they will not require any confirmation of solvency as it may be when receiving a payday loan in a bank with no registration or even an identification code. Moreover, you can even calculate a title loan with the help of a title loan calculator at MoneyZap, if you need a loan for a really short time. To get money, it is enough to provide a liquid deposit and an identity document: an internal passport, driver's license, international passport, military ID, or any other document where your full name is indicated. There has to be a photo and a signature with the seal of the official who issued this document.
The second advantage is speed. No credit committees! Everything is decided right at the pawnshop office. They will immediately tell you whether they will give it or not and if so how much. Then the client makes the decision. After all, the cost of "pawnshop" money is quite high: from 0.3% to 1.5% per day. That is 109.5-547.5% per annum. For comparison, even the most expensive bank loans before payday will cost 60-80% per annum. Still, it will hardly be possible to get a loan for a year in a pawnshop.
The average loan term for these financial institutions is about a month. The maximum loan term for taking out a payday loan is about 3 months. It is offered only by large chains of pawnshops.
Splendid Pledge at the Pawnshop
Most often, pawnshops accept jewelry, silverware, gold bars as collateral. When it comes to simple gold products or ingots, most pawnshops directly on their websites inform you how much money they are willing to give on the security of 1 g of "yellow" metal. Over the year, this figure has grown by several dollars. If you are going to lay an exquisite piece of jewelry encrusted with precious stones, do not expect to get a fair price for it. Pawnshops do not yet have the right to trade in jewelry but only hand it over as scrap.
Therefore, they are assessed accordingly by weight. There may also be problems with the laying of items made of platinum, diamonds, emeralds. Many pawnshops simply do not have appraisers (as a rule, they are in large network pawnshops). If there is still an appraiser in the pawnshop, then on the security of the jewelry, you can get 50-70% of its value. This is due to the fact that the market for precious stones is somewhat limited. Therefore, it can be difficult to sell them further for pawnshops. In this case, the payday loan online wins.
Payday Loan Online or Pawnshop?
Many people have more than once found themselves in a position where money is needed in a few hours. It is good if you have relatives or friends who are ready to lend you their shoulder at any time and lend you money "until payday." If this is not about you, then every time you find yourself in a similar situation. You have to look for a lender to take a payday loan online.
Some of the most popular lenders are pawnshops and microfinance organizations that can lend you money or a payday loan. The conditions for obtaining a loan in these organizations are fundamentally different. Therefore, before making a choice, carefully weigh the pros and cons of both lenders when taking a payday loan online.
Loan in a Pawnshop: What's the Catch?
A pawnshop is a point for issuing loans secured by a property. This property is the main disadvantage of pawnshops. In order to get a loan, you will have to give (even temporarily) something of value. The following can act as collateral:
- valuable jewelry;
- valuable metals in ingots;
- valuable stones;
- collectible coins, weapons;
- awards made of valuable alloys;
In addition, you will have to entrust your property to someone unknown. Its value should exceed the loan amount by at least one-third. In some cases, the assessed value of the collateral must be double the borrowed value. Few people are satisfied with such conditions. So other people are increasingly settling on microfinance organizations and getting payday loans online on more favorable terms.
Advantages of Microcredit
Microfinance organizations (MFOs) are companies that lend to borrowers without requiring the provision of collateral. Such companies appeared on the lending market relatively recently but rightly managed to gain popularity. Microfinance organizations work according to a simplified scheme. To apply for a payday loan online, it is enough to fill out a form that consists of simple fields. By taking out a payday loan at an MFI, you can get money on any bank card. Most MFIs give a loan within 10-30 minutes. To receive money, you do not have to leave your own home as payday loan services process applications online.
There is another advantage of applying for a payday loan at an MFI. If it is impossible to pay off the debt on time, you can "negotiate" with the MFI. Most pawnshops, in the event of a delay in debt repayment, do not stand on ceremony and immediately put up the property for sale. Microfinance organizations provide the opportunity to defer payment or extend the term taking into account the current situation of the borrower. At the same time, the MFI can raise the loan rate but you will not lose your property and will be able to return the money as soon as you have it.
The main advantages of MFOs over pawnshops can be formulated as follows:
- no need to pay a deposit;
- the most simplified lending scheme;
- efficiency of application processing;
- the opportunity to get a loan while at home;
- a more loyal attitude towards the borrower.
Thus, taking a payday loan online is more profitable and more convenient than giving away a valuable piece of jewelry, equipment or an award of grandfather to a “stranger's uncle”. MFI transfers money to any card within half an hour and does not require confirmation of the borrower's solvency. What else could be easier?
About the Author:
Frank Glemstone - Frank is a graduate of the Master’s program in Economics Sciences. He has written numerous articles about personal finances and wealth. Working as the main author for MoneyZap he is now with clients across the country, helping them achieve their financial and life goals.