Let’s say you need a small loan of a few hundred, or a few thousand dollars, and you don’t want or can’t use a credit card.
Where would you look and how would you find such a loan? In this article, we’ll offer some advice on how to get a small personal loan. Our expertise comes from helping over a million consumer search for a small personal loan through pawn shops, as an alternative to other institutions. First, we’ll provide some definitions.
What Qualifies as a Small Personal Loan?
There are 2 types of loans, revolving and installment. Revolving loans are like credit cards, where you have a limit you can borrow and you pay back the loans as you borrow the money. Installment loans are like mortgages and auto loans. You get all the money up front and pay back the loan in installments-usually a payment every month. Personal loans are installment loans.
You can have a personal loan for your new car, new house, refinance credit card debt, student loans, and anything else you can think of. What people call a small personal loan is usually for under $3000 dollars.
Why Are Banks, Credit Unions, and Peer-to-Peer Lenders Uninterested in Smaller Personal Loans?
You can get a larger personal loan– above roughly $3000 from a bank, credit union, or peer-to-peer lender if you have a credit score above 660, proof of income, and proof of reason. The banks and other lenders usually do a few background checks on you before deciding whether or not to lend to you. The background checks, the paperwork, and the payment infrastructure– both organizational and labor overhead– to allow you to pay back the loan generally cost more than the money they’d get from you on a $3000 loan. Remember, lenders are in the business to make money, if they lend out $1000 to you, they don’t get $1000 in profit, they only get the interest on $1000 in profit, and that interest is not enough to pay for the overhead of supplying the loan.
There are usually 2 places you can go to get a personal loan for under $3000. You can go to a payday lender or a pawn shop.
Can You Get a Small Personal Loan With Bad or No Credit?
Yes. You can get a small personal loan with band or no credit from a payday lender or a pawn shop. However, keep this in mind. Payday lenders still look at your credit score and your decision to take a payday loan will affect your credit score. Pawn shops do not, and therefore a pawn loan won’t impact your credit score. Pawn shops only look at the item you put up for collateral.
Payday lenders can give you a small personal installment loan. They specialize in loan amounts under $3000. However, they still base your loan and interest rate off of your credit rating, your proof of income, and the reason you are getting a loan. If you have bad or no credit, you can still get a loan from a payday lender, but the interest rates are usually extremely high, and if you do not pay they will send your loan to debt collection. Which as you might be aware is an unpleasant process!
A pawn loan is a small personal installment loan based off a small valuable item used as collateral. The real secret to these loans is that you are always put up something of value as collateral to base the loan off of. You could pawn a diamond ring, a gun, a video game console, a designer handbag, a luxury watch, or any other item that has value.
Pawn shops usually look for items that are small, with high value, that have a high demand, that do not depreciate fast, and that are easy to recognize and appraise.
Pawn shops will pay a ton for guns, jewelry, designer handbags, and luxury watches. Keep in mind though, about a third of all items pawned are electronics. Electronics are valuable and in high demand, but if you pawn your electronics, think of what will depreciate the least. An iPhone X is valuable but it won’t be worth nearly as much after a year. That means you’ll get cash for your iPhone, but potentially less than you expect. On the other hand, Nintendo Switches are still in high demand, because they do not constantly release new versions of it, and will be for another few years.
Pawning vs. Selling
You don’t have to pawn your item at a pawn shop. You can also sell your item. If you sell your item, you will get more money and you won’t have to worry about paying back a loan. Generally pawn loans will get you about 45-50% of the market rate for your item, whereas selling your item will get you about 60% of the market rate.
However, you can usually get much closer to market rate with a few choice items. Pawn shops really like diamond rings and guns. People know that they can get good deals on diamond rings and guns at pawn shops and will come in droves to their local pawn shop to pick up diamond rings and guns. Because of the high demand, the pawn shops don’t have to keep the item as long, and will pay you much closer to market rate. Remember though, pawn shops do not give you market rate, because they are middlemen, and need to make money to stay in business.
Why Pawn Loans Are Better Than Payday Loans
When you get a mortgage, you place your house up as collateral for the loan.
When you get an auto loan, you place your car up as collateral for the loan.
When you get a payday loan, you put up your credit score and your personal reputation as collateral for the loan.
When you get a pawn loan, you don’t have to put up your credit score and personal reputation as collateral because you put up a different valuable piece of collateral.
Payday lenders and pawn shops both give out small personal installment loans, but pawn shops tend to have lower interest rates, do not affect your credit score, and do not catch you up in a permanent debt cycle. The worst that can happen with a pawn loan is that you lose your item, which while bad, is not as bad as being sent to debt collection.
What is PawnGuru?
PawnGuru is a website service that connects people who want to pawn or sell their item to local pawn shops.
If you want to pawn or sell an item you own, simply submit your item to the platform. Shops in your area will be notified and will bid on your item. You usually get a bid within the first 24 hours. If you accept a bid on your item, simply drive over to the pawn shop with your item and pawn or sell it.
Why Use PawnGuru?
Not all pawn shops are identical. Pawn shops are radically different from each other. Some pawn shops specialize in high end jewelry, some pawn shops specialize in TVs, some pawn shops specialize in firearms. Different pawn shops are good at moving different goods. The pawn shop that specializes in TVs is very good at moving TVs and people in the area know that the best place to buy a TV is at the TV pawn shop. The TV pawn shop will give you a higher price for your TV, but might not know jewelry as well. The best place for your item is at the pawn shop that specializes in your item.
But how would you know which pawn shop to bring your item to? Well PawnGuru has you covered there. When you submit your item online, the pawn shops in your area are notified. They will bid on your item, and the pawn shop that wants your item and specializes in your item will reach out to you. You will get the highest price for your loan. You don’t want to risk it, the loan and price difference among pawn shops averages 258%.
So we can get you a bid within 24 hours, and get you more for your item. If you are afraid you don’t have enough valuable items to get a loan, we want to help you out as much as possible. You can always get a payday loan, but those lenders do use debt collectors if you don’t pay.
How Do I Use PawnGuru?
Using PawnGuru is simple.
First, find an item you want to pawn. Then go to our submission page and fill out the form.
Pawn shops in your area will be notified of your item and message you giving you different offers. You can accept the highest or best offer for your item and take it into the pawn shop to get a loan today.
You most likely have an item that a pawn shops wants. The items they want the most and are willing to pay large sums of money for, are firearms, jewelry, luxury watches, designer handbags, and electronics. If you have anything you think could be valuable around your home, you can most likely get a loan on it.
We hope this guide was useful for you! Nobody wants to be in a position where they need to get a loan, but if you find yourself in that position, we hope we can help you out. If you need a loan, but don’t think a bank or a credit union can help you out, you can always try PawnGuru to get the best deals on loans!