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Tuesday, 15 July 2014

Loans for Unemployed People on Benefits - Pawn Shops (IDEA 8 of 20)

This Post is Part 8 of the 20 Part Mini Series on Loans for unemployed people on benefits. One frequent question I get asked on the Millionaires Giving Money Blog is - Do loans for people on benefits really exist? After replying to a handful of these emails I decided to think of and share 20 short sweet loan ideas for unemployed people on benefits. Before I share these ideas its important that you carefully consider each loan proposal. Always look at the amount borrowed and the amount you have to pay back. You should also try and reduce the APR interest as much as possible because you'll be paying less in interest payments which inevitably make people poorer. Always fill out a financial statement which contains income and expenses and then look at the surplus you have left over every month. If your surplus disposable income is more than your loan repayments you can afford the loan without getting into financial hardship. Now without further ADO here is IDEA 8 of 20 on loans for unemployed people on benefits.

Loans for Unemployed People on Benefits - Pawn Your Valuables

Another option unemployed people have for a loan is pawning their valuable items at the Pawn Shop. Pawn Shops work by appraising valuables and then offering a loan based on approximately 50% to 25% of the value of the items. The interest rate is usually lower than pay day loans because the items are used as collateral for the loan. The loan is amortized over a period of time and a monthly repayment schedule is produced for the borrower. Borrowers are usually required to set up an automatic transfer from their bank account so the payments are made on time. When payments are not met the valuables are kept and sold for a profit. Pawn shops seldom make losses because they have the power to recoup the loan and make a profit after selling the items.

To get started gather all your valuables and have them independently appraised. If you have jewelry you can have the items appraised at any gold and silver store. Once you have an idea of the valuation you can go to the Pawn shop and negotiate the loan amount and the APR. Always go in with a loan amount in mind and never borrow more because your valuables are worth more (use less valuables). Also always try to negotiate a lower APR because this way you will be paying back less in interest payments. Once you have your loan agreement pay attention to the small print. In particular check how many payments can be missed before the items are sold by the Pawn Shop. 

If you go ahead with the loan make sure you can afford the payments by filling out a financial statement. If you can afford the loan go ahead however if you can't afford the loan then avoid it otherwise you risk all your valuable items being sold by the Pawn Shop. Pawn loans for unemployed people on benefits is a great way to raise money however you must be aware of the risks involved.   

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