Believe it or not, more than 30 million Americans use pawnshops to help cover their expenses each year. Some people sell items to those pawn shops while others choose to take out a loan, using their belongings for collateral.
Pawning a car is one of the best and fastest ways to get a large amount of money quickly. However, if you’re looking into getting automobile pawn loans, you need to understand how the process works before you can make the best decision for your finances.
Here’s what you need to know to get the most out of your auto pawn loan.
Understand Your Options
Before you start looking for pawn shops in your area, you need to figure out how you want to pawn your car. There are two main options here: you can pawn the car itself or you can pawn the title.
Pawning the car means you give your car to the pawnshop in exchange for a cash loan. Once you repay that amount in full plus any interest accrued, you’ll get your car back. The pawn shop will store the car in a secure area until you can come to reclaim it.
When you pawn the title, the pawnshop becomes a lienholder on that title. They hold onto the title, not your car. This gives you more flexibility if you’re still trying to commute to work or don’t have access to reliable public transportation.
Regardless of the option you choose, your car will be the collateral for your loan. If you repay the loan in full, you’ll get your car or title back without issue. However, if you fail to repay the loan, the pawnshop will take possession of the car and can use it to settle your debt.
You Can Always Sell
When you pawn your car, the amount of money you’ll receive will almost always be less than your car’s value. This is because pawn shops need to be able to make their money back if you end up defaulting on the loan.
That said, most pawn shops that provide automobile pawn loans will let you sell your car instead. This will give you more money upfront while also helping you avoid high-cost interest payments.
There is no wrong answer here. Ultimately, you’ll want to choose the solution that fits your needs best.
Research Pawn Shops in Your Area
Not all pawnshops issue auto pawn loans. You’ll need to find a dedicated car pawnshop or one that’s willing to issue loans for your car.
Take your time and research the options in your area. Make a note of each location and call ahead to see if you need to schedule an appointment before you drive over.
It’s also a good idea to read up on the reviews for each pawnshop you’re considering working with. See what their previous clients have to say about their services and their rates.
Pay close attention to any complaints about the way the shop treated their property while they repaid the loan. If you notice multiple reports of pawned items getting returned in damaged condition, keep looking.
Prep Your Car
When you bring your car to the pawnshop, their staff will appraise its value and issue you a loan in the amount they deem appropriate. You may be able to increase the amount of money you qualify for by giving your car a little TLC ahead of time.
Wash the exterior thoroughly and get rid of any dust and dirt that could look like scratches in the paint. Take the time to vacuum and clean the interior thoroughly.
If you’re not sure where to start, you can always take your car to a professional car wash and let their team take care of it for you.
Once your car is ready, you’ll be able to head to the shop with confidence. Remember, the newer your car is and the better condition it’s in, the more it’s worth.
You’ll also want to make sure you have the original title for your car before you head to the pawnshop. You need to own your car outright to sell it or get an auto pawn loan. If you don’t, you’ll want to look into other loan options.
Get Quotes From Several Shops
When exploring your options for vehicle pawn loans, you’ll want to shop. Head to several pawn shops in your area and get quotes for your pawn loan.
Most shops will give you time to review the terms and their offer before you make a decision. Use this to your advantage.
Look at the amount of money each shop is willing to give you. Then, look at the interest rates and any additional fees they may charge.
You’ll want to choose the pawnshop that offers you the best offer and the lowest interest rates. Remember, the higher your interest rates are, the more money you’ll end up paying the pawnshop in the long-run.
Try to make sure you’re comfortable repaying the full loan amount before you accept the money. This way, you’ll avoid losing your car.
Make a Repayment Plan Immediately
As soon as you accept the money for your car, start coming up with a repayment plan. Stick to that repayment plan as closely as possible so you’ll be able to pay the loan off by the end of the term.
If you think the payments are too high for you to handle, don’t accept the loan. Remember, you don’t have to accept the pawn loan just because you got a quote from the shop. You’re free to walk away and look for an alternative way to help cover your expenses.
Are You Considering Using Automobile Pawn Loans?
If you’re thinking of getting quotes for automobile pawn loans from local shops, keep this guide in mind.
Make sure you do your research and choose a shop that you can trust to keep your car safe. Remember to only borrow what you need so you’ll be able to repay the loan in full without forfeiting your ownership of your car.
Pawn loans can help you get cash fast, but they’re not the only way to increase the cash you have on-hand. Check out our latest posts for more tips on improving your finances and getting out of debt the smart way.
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