Australia is going through the worst economy it has gone through in years. It isn’t the only country that is going through tough times. The world economy has taken a serious knock and Pawnbrokers Melbourne have been providing lifeline to people who find themselves in tough financial strain.
Regulated Pawnbrokers Melbourne provide a safety-net loans to millions of people. Pawn loans are given based in the collateral that customers offer as security. Unlike other kinds of loans, pawn loans do not trap people in a cycle of debt.
Why do people go to Pawnshops?
Pawnbrokers have been around for centuries. They have always been around to serve people who needed cash when times are tough. But to be honest, everybody goes through a rough time at some time. You might ask yourself why people don’t just approach the many pay day lenders that are available or to just go to a bank?
The main difference between Pawnshop loans and short-term loans like payday loan is that one requires security and the other doesn’t. Both types are easy to get but there are vast differences. To get a pawn loan you need to provide collateral with items like jewelry and electronics. The loan amount will vary based on the value of the collateral and on state credit regulations. The Pawnbroker also has to account for secure storage and other overhead costs. Repayments are usually from 30 days to 6 months. The interest rate that pawnloans charge between 5 and 25%. If you default, the item you have used as collateral will be sold to cover the loan.
One of the requirements for payday loans is that you need to be employed. The loan period is also 30 days. The point of payday loan is to get you from one pay check to the next. This means that some lenders will only give you a percentage of your salary and nothing more. Payday loans are also notorious for high interest rates and fees. You can easily get yourself trapped in a cycle of debt where you find yourself taking out a second or third loan just to pay back the first one because you keep missing the deadline. When you weigh the risks: a pawn loan offers fewer risks than a payday loan.
Pawnshops help families through challenging financial times by providing short-term loans. Most customers appreciate this form of credit and they usually borrow what they need when they need it. The loan amounts are rather low. Pawn customers repay the loans to redeem their valuables. Contrary to popular belief, most people redeem their valuable items. The same parameters that were there before the Coronavirus pandemic still hold true despite the current economic situation.
The industry is very regulated. Pawnshops have to adhere to strict license requirements and laws that concern the terms and conditions that Pawnbrokers offer. Every aspect of a transaction from interest rates, loan period, the redemption methods and record-keeping is strictly controlled. The fees that Pawnbrokers charge are also regulated by law. This means that Pawnbrokers cannot just increase their interest rates whenever they feel like it.
There is no other financial services would be able to fill the void left by the disappearance of the pawn industry. Right now, this industry is crucial to help people get through these difficult times.