Often you may encounter a difficult financial situation when you really need money. Usually at this moment there is no possibility (or no desire) to borrow from friends or acquaintances, no credit card, and a cash loan is considered for a long time. The situation may be aggravated by a negative credit history or, conversely, by a strong loan load. In this case, a pawnshop comes to the rescue. For a fee, the pawnshop will lend the required amount, but in return you will need to pledge a certain thing. After paying off the debt, this thing is returned back to the owner.
If the borrower is not able to pay the debt, then the pawnshop simply sells the pledged item and repays the debt. Borrowers with the worst credit history can go to the pawnshop, and they won’t even check it here. The deposit will be a guarantee of return, and in case of non-return the pawnshop will still remain in the black. The activities of pawnshops are regulated by the Federal Law About pawnshops »No. 196 of 07/19/2007 g.
If before pawnshop services were considered something obscene, now there are quite a lot of these organizations. People prefer not to notify friends about financial difficulties. To get the required amount, it is enough to pledge a valuable thing, and when the money appears, pay off the debt and buy it back. However, this process occurs under certain conditions.
What is a pawnshop?
This is a commercial institution with a narrow specialization, which issues short-term mini-loans secured by things / property. If there is an appropriate guarantee, the approval of a min-loan is almost one hundred percent, and the time to receive money is a few minutes.
The business of pawnshop institutions is based on a mortgage principle: a valuable thing is given for storage, and in return an amount equal to a part of the value of this thing is given out. In financial terms, the activities of pawnshops are the issuance of short-term loans secured by liquid assets. By law, a pawnshop does not have the right to engage in business, other than providing loans, storing things, and providing information and consulting services. For storage of collateral in the premises conditions must be created (for example, safes), thanks to which the collateral will remain intact until the time of redemption.
The borrower has the right to redeem the delivered thing in a timely manner (indicated in the contract). Redemption periods can vary from 2 days to a year. The buyback price is defined as the amount given out on hand plus the percentage for storage. The amount of interest may include payment for the storage of collateral, insurance, use of borrowed funds.
When making a mini-loan at a pawnshop, a passport and a security deposit are required, which will be evaluated by specialists, after which the amount to be issued is calculated. Usually it is 40-75% of the market value of the collateral. This is due to the fact that if the borrower cannot repay the debt, the pawnshop can sell the thing and fully cover its expenses. There is also a risk of depreciation of the collateral, for example, if the collateral is equipment that becomes outdated every six months.
The process of obtaining a loan at a pawnshop
- Assessment of collateral and calculation of the amount.
- Coordination of the conditions for issuing and repaying a loan. Here, on individual terms, the term for repayment of the debt, the amount of interest, the amount payable, the parameters of repayment, the conditions for non-repayment of the debt and the sale of the subject of the pledge are discussed.
- An agreement is concluded in which all conditions are prescribed.
- A mortgage sheet is filled out, which states: to whom the minisredit has been issued, by whom it has been issued, for what amount, date and place of issue, description of the deposit, amount of payment for using money.
Within the specified period, the amount with interest must be returned to the pawnshop. If the borrower did not do this, then the pawnshop begins to realize the pledge. This can be done, by law, a month after the expiration of the contract. If the borrower is not ready to fully repay the debt, then he has the right to pay interest for the current period and extend the contract. In this case, the deposit is again sent for storage.
The contract may be terminated ahead of schedule if the Ministry of Internal Affairs declares the confiscation of the pledged thing. The pawnshop is obliged to notify the borrower of this within 3 days in writing.
Types of pawnshops.
There are several types. They differ in their specialization and focus. If a pawnshop pledges any things: cars, jewelry, art objects, etc., then the direction of its work is universal and broadly directed. If a pawnshop accepts only precious metals or jewelry, then this is a highly focused organization. Consider the main common types:
- Jewelry. They work exclusively with jewelry and jewelry. Gold, silver, platinum are accepted as collateral. Everything is tested with special instruments for compliance with standards and samples. Since these things lose little in value over time, you can get a larger percentage of market value (up to 80%) under them. They are also highly liquid, and a pawnshop can easily sell them at no additional cost.
- "Under the technique." This type of pawnshop is also one of the most common. Here you can get a loan secured by household appliances. In this case, the equipment is accepted only in good condition and preferably under warranty. Secured by technology, you can get about 35-40% of the market value. This is due to the fact that the equipment becomes obsolete quickly, it can break. Most often they lay mobile devices, TVs, PCs.
- Antique. These pawnshops take on bail antiques, paintings, art objects, coins and so on. Experienced collectors show great interest in such pawnshops, since you can find really rare things there. The loan amount for antiques can reach 60%. This is due to the fact that often borrowers themselves do not know the real price of collateral. Appraisers take advantage of this and lower the estimated value.
- Wares. These pawnshops accept fur and leather products on bail. Most often, fur coats from expensive furs (arctic fox, mink), genuine leather jackets and so on are rented here. Such organizations are equipped with special facilities for storing such goods. The loan amount can reach 50% of the value of the collateral.
- Automotive. Here cars are pledged. Previously, the car was driven to the parking lot until the debt was paid, but now, due to the high cost of storing such a volume of collateral, pawnshops prefer to take only PTS as collateral and issue a CASCO for the car. As a result, the client is left with his car, and if the collateral is destroyed, the pawnshop will still receive his insurance money. Secured by a car, you can get a decent loan of several hundred thousand rubles.
|Amount (% of the appraised value)||Up to 80%||Up to 40%||Up to 60%||Up to 50%||Up to 80%|
|Percentage (per day)||0,2-0,4%||0,3-0,5%||0,1-0,4%||0,2-0,4%||5-10% per month|
|Term||Up to 1 year||Up to 1-3 months||Up to 1 year||1-3 months||Up to 1 year|
Comparisons with other types of loans.
The main and undeniable advantage of pawnshops is that they will give out a loan even with the worst credit history. The client does not need to prepare a lot of documents and wait a long time. But the loan is not granted free of charge: a valuable thing is pledged. Even if the borrower is unable to repay the debt, it will be repaid through the sale of collateral. In this case, the client will not be refused to issue subsequent loans. Loan terms for pawnshops and MFIs are similar - the overpayment is approximately the same.
See also: How to calculate overpayment under a loan agreement?
If money is often and constantly required, then if possible you should get a credit card or take a regular loan. If this is not possible, then the services of pawnshops can come to the rescue.
What can be left as a deposit?
Often the idea of contacting a pawnshop arises when money is urgently needed. The pawnshop is ready to help solve this problem. Naturally, not for free. The main condition under which you can provide the right amount of money is a thing that can be left as a deposit.
As a rule, jewelry, jewelry, mink coats are accepted as collateral. You can also lay a car, silverware, crystal, crockery made of porcelain and glass, household appliances and electronics, furniture, some items of clothing and shoes. The main thing to remember is that you can get a “decent” amount only for a thing that is of any value. It’s pointless to bring any rubbish to the pawnshop - they simply will not accept it there.
Significant difficulties can arise if you decide to pack large items: most pawnshops are located in small rooms and are physically able to store only small items.
What is needed to get a loan?
In addition to the deposit, you need to present your passport at the pawnshop. Other identification documents (driver’s license, birth certificate, etc.) are not suitable. The reason is simple - the relationship that arises between the client and the pawnshop is fixed by the contract, for the execution of which you need a passport. Only a citizen of the Russian Federation who has reached the age of majority can become a client of a pawnshop.
“Armed” with a future pledge (let it be a golden ring) and a passport, you come to a pawnshop. First of all, you need to carefully look at the buyer's corner: that is where all the information about the pawnshop should be indicated.
The absence of registration data, price list, contacts of the management in the buyer's corner should alert the person. A reliable pawnshop has nothing to hide. If everything is in order with the documents, you can safely contact a pawnshop employee - a merchandiser.
How is the value of the collateral estimated and the amount of the return calculated?
First, the merchandiser will evaluate your ring in accordance with the current price list. Estimated value - this is the amount at which the pawnshop evaluates the ring, which you can get on hand. The assessment will depend on several factors: the degree of wear of the ring, weight, test, the presence of the brand, as well as the period of use of the loan that you choose. It is not necessary to take the full amount of the assessment, you can take only part of it.
For using the loan, the pawnshop sets a certain percentage, which depends on the amount and duration of the loan. The interest rate also strongly depends on the pawnshop itself: somewhere you can get a loan at 0.3% per day, somewhere at 0.4%, at 0.459%, etc.
How is the pledge and redemption procedure at the pawnshop? What is a security ticket for?
If the conditions of the pawnshop suit you, a loan agreement is concluded. You leave the merchandiser ring, get money and a security ticket. A lot of problems between the pawnshop and the client arise in the future due to the fact that the person inattentively read the contents of the security ticket. It is in the collateral ticket that the subject of the pledge (in our example, this is a ring), the data of the pawnshop itself, the amount of the assessment and the amount of money given out to the hands are recorded in detail (it is important to remember that these amounts may not coincide), the interest rate, the date of receipt of the loan and its term graduation. It takes less than 5 minutes to complete a loan agreement.
A security ticket must be kept until the end of the loan term, because when purchasing your product, the merchandiser will ask for a security ticket and, of course, a passport.
The buyback procedure is similar to the mortgage procedure, just the opposite. On the day the loan ends (early), you must come with the required amount of money (this is the loan itself + interest) and present documents. The merchandiser takes money from you and returns the jewelry to the owner. If you cannot buy the product at the end of the loan term, it is enough to simply pay interest and extend it.
If you do not have time to redeem a pledge
Under the law on pawnshops, a client has a so-called grace month. This means that after the loan term has expired, you have another 30 days during which you can redeem the product, of course, subject to payment of all accrued interest.
If the client has not purchased the pledged product even after the “grace month” has passed, it is sold at auction, and the proceeds cover the costs of the pawnshop on the issued loan and unpaid interest. Thus, the client does not risk anything other than the subject of the pledge.