Online Payday, Installment, and Pawn Loans

February 01, 2020 - Pawn Resources

Do you need a loan today? We’ll break down the 3 main types of loans so you can decide which one is best.

What is an Installment Loan?

An installment loan is a type of loan where you get all the money up front and pay it back in installments, usually every month. Student loans, mortgages, and auto loans are all technically forms of installment loans. These loans either have a fixed or adjustable interest rate and are paid every installment until complete. However, when most people talk about “installment loans”, what they mean are not those. They’re thinking of uncollateralized, relatively high-interest personal loans. These have recently proliferated over the internet.

What is a Payday Loan?

A payday loan is a type of installment loan. When you’re talking about installment loans in the colloquial sense, you are basically talking about payday loans. What I mean is, they’re not very different, if at all. It works like this: you get a loan all up front and then pay it back in installments, usually every month. The only conceptual difference between payday loans and installment personal loans is that payday loans might have shorter terms or higher interest rates than other personal installment loans. In other cases, the difference is more about loan size. Usually, the things people call installment loans are for amounts larger than $3000 because the background check and loan application has a significant amount of overhead cost. Payday loans are usually for under $3000.

What is a Pawn Loan?

A pawn loan is similar to an installment loan, but it is predicated on collateral instead of your credit rating. Pawn loans are also called collateralized loans. With pawn loans, you bring a valuable item to the pawn shop and hand it to them for a loan. The loan is up front and you pay it off with interest every month until it’s complete. The main differences are that pawn shops don’t care about your credit history, and what happens if you don’t pay it off. With personal loans, installment loans, and payday loans, if you do not pay off the loan you go to debt collection and get hounded until you pay back the loan. Whereas with pawn or collateralized loans, if you do not pay back the loan, you lose your item. Losing your item sucks but is widely considered better than being trapped in an escalating series of fees and interest forever.

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 pawn loan, you can put up any valuable item as collateral for the loan.

But when you get a payday loan, you don’t put up any collateral, which makes the terms much more difficult for consumers to manage. As a result, fees are higher, interest rates are often higher, and the lender can pursue you for many times what the original loan was worth.

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 ensnare you 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.

Which Loans Require a Credit Check?

If you are going to a bank to get a small business loan or a mortgage, they will perform a credit check on you. If you apply for a credit card, the credit card supplier will do a credit check on you. If you are applying for a payday loan, the payday lender will do a credit check on you. If you want to rent a room in a house or set up utilities for your home, sometimes the company will do a credit check on you too. Guess who doesn’t need a credit check? Yes, pawn shops, because they’re going to collateralize your loan with an item.

How Can You Get an Installment Loan or Payday Loan Online?

For peer-to-peer installment lenders, you apply in a slightly different way. You give the peer-to-peer lending organization your current income, social security number, credit score, current job, and reason for application. Then the organization does a background check on you and put your application on the market. Different lenders bid on your loan application and you get to choose which loan to accept. It tends to move a little quicker than a bank.

You can get an online payday loan, alternatively called an installment or personal loan, by filling out an application from a payday lender. You have to put down your standard personal information, your social security number, your loan amount, and your job and income. You can usually get the loan the same day.

How Can You Get a Pawn Loan Online?

While you cannot pawn an item online, you can get a pawn shop to give you an offer on your item online. You can only pawn an item in person because the pawn shop needs to have your physical item in their possession to give you a loan. The best place to get an offer from a pawn shop is PawnGuru.

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 make offers for your item. You usually get an offer 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.

Get local cash offers for it – free, fast & easy.

Pawn or Sell My Item

How Will PawnGuru Let Me Know Which Pawn Shops Will Give Me the Best Deals?

Here is where we get into the inner workings of PawnGuru.

In 2014, our CEO Jonathan visited eight Detroit pawn shops with a violin, an iPad, a gold ring, and a diamond ring. He wanted to answer the question of whether pawn shops offered the same prices for the same items or different ones. He found a huge spread from the different pawn shops. Some pawn shops offered hundreds of dollars for items that some pawn shops only offered pennies.

For the iPad, one shop offered $50 for a pawn loan, and the other 6 shops offered over $100.

For the diamond ring, one shop offered $65 for a pawn loan and another offered $1060.

All 8 of the shops they visited were located within 15 minutes of each other in the Detroit area. These price differences are common for the pawn industry.

In fact, we did an analysis over an entire year, and found the time of year greatly increases variance too. In May, the average difference between the highest and lowest bid was 405%, and in December it was 184%. People tend to pawn the most during the summer months and pawn shops want to sell the most during the fall and early winter.

The gist of this experiment is that not all pawn shops specialize in the same materials. I spoke to a wide variety of pawn shops at our latest Pawn Innovators Conference. Some pawn shops only dealt jewelry, and some didn’t even have jewelry! You don’t want to take your diamond ring to a shop that only deals in electronics.

It’s all about supply and demand. The pawn shops need to move their items faster, and if they’re known in the community to be the best place to buy a TV, they would love to take your high-quality TV. If you try to give them a diamond ring, they won’t be able to sell it as fast, so they won’t be able to give you the best possible deal for it.

The average spread for pawn shops in 2015 was 258%. Jewelry has the largest offer difference, and video game consoles have the smallest offer difference. Each ring and necklace is unique, whereas each console is a factory replica. If your video game console is in good working condition, then it should be worth about as much as the other identical video game consoles around. Still though, the offer difference between the highest and lowest offer for a video game console was 50% in 2015.

So which store is the best store to pitch your item to? The specialized stores give the highest offers. The store that only buys/loans/sells jewelry wants your jewelry the most. The store that mostly buys electronics wants your TV the most. Furthermore, the specialized shops have specialized knowledge. The TV store knows what a quality TV is. The jewelry store knows how to tell genuine diamonds. The handbag store knows how to tell fakes. The shops who know your item’s quality are the likeliest to pay for it.

If you get what seems like a low offer from a pawn shop – remember, it isn’t about you. Your item might not be right for that shop, and that’s okay. There are plenty more who can and will express interest.

Finally, the difference in pawn shop offers has to deal with their cash on hand. They will pay you immediate cash for your item. The more cash on hand the shop has, the better or larger the offer they’ll be able to make. Cash on hand varies with the time of the month and their inventory.

Which Items Get the Most Money From a Pawn Shop?

Pawn shops value firearms, jewelry, luxury watches, and designer handbags the highest. These items last the longest, have the least decline in value, and are in high demand in the marketplace. Pawn shops actually value firearms the most.

If you have another item that has high value, low depreciation, and have a high market value, pawn shops will give you lots of cash for it.

After firearms, jewelry, luxury watches, and designer handbags, pawn shops like:

  • Cars, Trucks, Boats, and Motorcycles. Come with your title in hand
  • Computers, desktops, and laptops
  • Large Flat Screen TVs
  • Riding Lawn Mowers
  • Video Game Consoles
  • Speakers
  • Smartphones
  • Digital Cameras
  • Power Tools
  • Bikes
  • Refrigerators
  • Washers
  • Dryers
  • All Home Appliances
  • All Other Electronics

How Do I Prepare My Item for a Pawn Shop?

First, clean it thoroughly. Pawn shops want to know that they can resell your item if they need to. They can’t resell a dirty item. Obviously don’t put your laptop in the dishwasher or tarnish your silver, but take reasonable measures to make your item presentable without damaging it.

Second, make sure that it works. Pawn shops do not want your broken lawnmower or PlayStation. However, for jewelry, if you have half of a necklace or a ring that is missing a few pieces, your item is worth at least the materials it is made out of. A gold ring is still worth the value of the gold it is made from.

Third, make sure you have all the component pieces. If you are bringing in an iPhone, make sure you have the iPhone charger. If you are bringing in a TV, bring in the TV remote and stand.

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.

Do You Need a Short-Term Loan?

Submit your item to PawnGuru today! We’ll match you to local shops. The shops will help you pawn or sell your valuables for money today.

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 shop 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!

David Stiebel
David Stiebel

David Stiebel is one of the cofounders of PawnGuru. David was educated at MIT, where he studied Math. He subsequently worked at Bain as a data scientist before starting PawnGuru in 2015. He started PawnGuru to build a better tool for pawn shops and consumers to connect.

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Avatar for Steele Honda

Steele Honda

May 31, 2019, 1:44 AM

Thanks for detailing how pawn shop loans work. I appreciate that you pointed out that you need a valuable item to use as collateral for the loan. I am thinking about getting a pawn shop loan because I think it would be a good way to get the cash that I need right now so I’ll have to see what items I have that will work.

Avatar for Stefan Bradley

Stefan Bradley

August 12, 2019, 5:18 PM

I didn’t know that you can negotiate up to 60 percent or more of an item’s value if you maintain a business relationship with your broker. My wife won’t be able to afford rent as a result of a recent hospital visit, and we need to find some money so that we aren’t kicked out of our apartment. I think it would be a good idea for us to find a pawnshop that we can get a loan from at a reasonable price.

Avatar for Ashley


October 11, 2019, 9:08 PM

I liked that you said that one thing to consider when you are thinking about taking out a pawn loan is to make sure that you follow the agreement carefully in order to avoid the loss of collateral. I have been thinking about taking out a pawn loan with my husband but we haven’t been sure how this process works exactly. We will be sure to gain information on this subject and we will be sure to hold up your end of the deal in order to ensure a gain of collateral and not a loss thereof.

Avatar for Eileen Benson

Eileen Benson

November 4, 2019, 7:50 PM

Thanks for explaining that the collateral for a pawn loan needs to be valuable enough that the owner thinks it’ll be able to sell if the need arises. I’ve been thinking about pawning some of my items because my husband and I are having trouble making rent this month. Your article helped me see that using some of my nicer jewelry for loan collateral would be a good idea.

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