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Pawn Shop Loans vs Payday Loans

Many people find themselves short on cash and looking for a way to borrow money. You may have even found yourself in this situation. There are many different types of cash loans, but two of the most popular are payday loans and pawn shop loans. If you’re looking for the best options for your financial situation, you may want to compare the two. Once you compare pawn loans vs. payday loans, most people realize their local pawnbroker offers the safest loan by far.

What Are Pawn Shop Loans?

Can I get a Pawn Shop Loan Near Me?

Pawn shop loans are offered by pawn shops all over Virginia and the rest of the country, including Hilltop Pawn Shop. These are collateral loans that are paid in cash. At a pawn shop, the pawnbroker will hold your valuable items safely in their shop until you return to redeem your loan. They will give you a cash loan based on the value of these items. Here at Hilltop Pawn Shop, we accept all sorts of items of value, including diamond and gold jewelry, high quality watches such as Rolex and Omega, unwanted old or broken gold, musical instruments and much more. Basically anything of value. We make it possible for you to borrow money the easy way.

What Are Payday Loans?

Payday loans are quick cash loans that are offered by payday lenders. These are short-term loans that you will generally repay on your next payday. Typically, the money will be withdrawn from your account automatically on the date that you receive your next direct deposit. This can be a good way to take out a small personal loan, although it has its downsides. The biggest of which is the fact that Payday loans can affect your credit.

Pawnshop Loan Requirements

Top Reasons People Take Out Pawn Shop or Payday Loans

Borrowers take out pawn shop loans or payday loans for a number of reasons, including:

  • Handling unexpected car or home repair bills

  • Vacations

  • Getting caught up on bills

  • Paying moving expenses

  • Covering unexpected medical bills for themselves or their family members

  • Covering insufficient funds or overdrafts in their bank accounts

  • Handling holiday expenses, such as gifts, holiday dinners, decorations, or travel


Of course, this is just a short list of why people typically take out loans. Whether you choose a payday loan or pawn loan, you won’t have to share what you need the money for. Both types of lenders will typically loan you money for any reason, no matter what your financial crisis might be.

What Are the Benefits of Payday Loans?

Some find that a payday loan is one of the best financial products for them. Naturally, there are some benefits to payday loans. A single payday advance from a payday cash advance service might make sense if you have a steady monthly income and just need to borrow some money until payday and no longer. This can be convenient if you’re short on time or if you don’t have transportation, but remember these loans compound at a greater rate or interest than pawn loans and they compound each of your paydays, not once a month as does a pawnbroker loan.


Why Pawn Loans Are Better Than Payday Loans

Now that you know a little more about pawn shop and payday loans, you could be wondering which one will be best for your situation. Although some people do successfully use payday loans to get out of bad financial situations, pawn shop loans from shops like Hilltop Pawn Shop are typically a much better choice for all the following reasons.


There’s No Risk to Your Financial Future

Taking out a payday loan can be risky for a couple of reasons. For one thing, if you default on the loan -- such as if you aren’t able to repay your loan on your due date -- your credit score could be affected. Even if the payday lender didn’t check your credit before granting the loan, they could still add the defaulted loan to your credit report. This can impact your ability to take out loans in the future, and it can even affect things like your ability to rent an apartment or get a job. The effects can be long-lasting; it may be seven years before the defaulted loan is removed from your credit report, even if you repay the loan later.


Additionally, you generally have to share your bank account information and social security number with the payday lender when you take out this type of loan, even if the lender isn’t running a full credit check. Although you shouldn’t have anything to worry about if you go through a reputable lender, there are a lot of scams out there, so you’re putting yourself at risk by sharing all of this information. This is particularly true with online payday loans. There’s also the possibility of some type of data breach that could lead to your financial information being shared with the wrong individuals. You never have to share your bank account information or social security number when you take out a pawn shop loan, so you don’t have to worry about these potential financial impacts. Pawn Loans Do Not Affect Your Credit.



There is No Application Process

Although payday lenders don’t usually perform a credit check, there are some that do. Pawnbrokers never perform credit checks. Also, unlike payday lenders, you don’t have to worry about an application process.


The financial institutions that grant payday loans will typically have you fill out an application. You don’t have to worry about this hassle with pawn stores. Instead, you typically just have to produce your driver’s license or other form of ID, as well as your items of value.


It’s a Regulated Industry

The National Pawnbrokers Association is committed to the integrity of the industry, and your local pawn shop owner probably is, too. The pawn industry is regulated on a state by state basis, so you shouldn’t be charged any more in interest and fees than what is allowed by state law.


Pawn shop loans are allowed in all 50 states, while payday loan contracts are considered illegal in 22 states. This is because payday lenders are commonly known for absurdly high interest rates and predatory practices. Even the best payday loans can be incredibly expensive for the average borrower. In fact, the Consumer Financial Protection Bureau warns of the dangers and costs of taking out these loans.


 If you want to protect yourself and work with a more reputable and reliable lender, visiting your local pawn shop is probably a better idea. After all, pawnbrokers are required to be licensed, have to keep records to show they are following state laws, and are at risk of fines and penalties if we violate these laws.



You Don’t Have to Have a Steady Income

To take out a payday loan, you often have to have a traditional form of income that you can prove before you can get approved for the loan. Generally, you will need to have a steady, reliable paycheck that you receive on a pay schedule, such as weekly or biweekly. You might be required to have a minimum monthly income, too, depending on the loan amount that you’re asking for. You’ll generally need to show your paycheck stubs or bank statements during the application process.


If you’re like many people nowadays, though, you might not have a traditional income. You might be self-employed, for example. Many people work for gig apps in today’s gig economy, such as by delivering food or shopping for groceries for customers. Just as it can be difficult to qualify for a traditional loan with this type of income, it can be hard to get approved for a payday loan, too.


The good news is that your source of income doesn’t matter when you take out a pawn loan. In the pawn industry, the value of your collateral is all that really matters. We won’t even ask about your job or income when you take out a loan from us. It’s up to you to determine if you will be financially able to repay your loan on your due date.

You’ll Get Your Cash Instantly

If you’re considering either of these types of loans, chances are good that you’ve found yourself in a tough spot. You might need cash as soon as possible. Even though some payday lenders advertise quick payouts, it may take a day or longer for the money to be deposited in your checking account. The day that you bring in collateral, the in-store experts will determine their value and offer you a loan amount. You should receive that loan in cash right then, which will be incredibly helpful if you’ve found yourself in a financial bind.


Do’s and Don’ts for Taking Out a Pawn Shop Loan

Now that you know a little more about the differences between pawn shop loans and payday loans, you might have decided you want to take out your cash loan from a local pawnbroker. These are some of the do’s and don’ts that can help you have a great experience.


Do Bring in Items of Value

You should consider how much you want your loan amount to be before heading to your local store. If you want to get a quick cash loan for your desired amount, you will need to bring in enough items of value to qualify. These are just some of the items that you can bring in:

  • Gold jewelry

  • Diamond jewelry

  • Vintage or antique jewelry

  • Firearms

  • High Quality Watches, Rolex, Omega, ect.

  • Unwanted gold

  • Musical instruments

  • Apple products

  • Laptops or tablets

  • Anything of value really


This is just a short list of things we accept at Hilltop Pawn Shop. Be aware that you don’t have to bring just one item at a time; instead, you can bring a variety of items, and they can all be used together for your collateral. Our knowledgeable staff will do a visual inspection of your items, determine their approximate current value, and give you a loan offer. According to the National Pawnbrokers Association, the average amount of a pawn shop loan is approximately $150 however, here at Hilltop Pawn we make loans many times that on a daily basis. Like our commercial says $5 to $50,000 in about 5 minutes.


Do Understand What it Means to Use Collateral

It is very important to be aware of what it means to bring your collateral to a pawn shop like Hilltop Pawn Shop. If you repay your loan on your due date, you don’t have anything to worry about. Your items will be kept secure and safe until you pick them up, and you can retrieve them as soon as you pay your loan back in full. 


However, you should be aware that your collateral will be retained by the pawn shop if you default on your loan. Therefore, you should make sure you will be able to repay the loan before bringing in items of sentimental value or items that you will need to use sometime soon.


Do Bring ID

Pawnbrokers are required to check ID and document some of the information from your driver’s license before granting you a pawn loan. Make sure you bring along your ID to avoid getting turned down and to avoid getting delays.


Don’t Lose Your Pawn Ticket

When you receive your cash loan, you will be given a pawn ticket. This has information about your interest charges and the amount of time that you have to repay your loan. It will also have your due date listed and information about renewing or extending your loan, if applicable. Also, having your pawn ticket will help you speed things up when you go to repay your loan and collect your collateral.


Don’t Be Afraid to Ask for What You Want

Your loan amount will be based on the value of your collateral, but this number is sometimes up for negotiation. Don’t be afraid to ask for the loan amount that you want. If you need to bring more collateral in to get a loan of the size you have in mind, the pawnbroker can give you advice about what to bring in.


Don’t Assume You Can’t Use Your Item as Collateral

Of course, there are some items that are more appealing and valuable for pawnbrokers than others. At a shop like Hilltop Pawn Shop, for example, we specialize in jewelry. This means we’re always looking for engagement rings, diamond necklaces, bracelets, and other similar items. However, don’t assume that we won’t accept your item as collateral just because you don’t see similar items in our shop. We accept all items of value as collateral, so bring in your merchandise so we can take a look.


Both payday loans and pawn shop loans can be valuable and useful financial products. Once you do your research, though, you’ll probably realize that a pawn shop loan is the better choice. Stop by Hilltop Pawn Shop today to find out about your borrowing options.


What Pawn Shops Take For Loans

Have a look on this page to see all about Pawn Shop Loans and what items we take as collateral.

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