How Do Collateral Loans Work?

When you need some fast cash, you can take something in your house that has value and head to a pawn shop. Collateral loans are offered by pawn shops to help secure quick cash without impacting your credit score or credit history. The convenience this type of loan offers has made it the best way to borrow money fast, especially for people who have poor credit.

Are Pawn Shops Safe Places to Borrow Money?

Pawn shops are not shady places where people exchange illegal items for cash. Rather, they’re regulated by federal, state and county laws. They’re clean places where professionals offer great customer service.

How Does a Pawn Shop Loan Work?

Pawn shops, like The Vault Jewelry and Loan, provide collateral loans. These are loans that are secured with a valuable item. You bring in something valuable like a piece of jewelry, precious metals, your car, a musical instrument, your power tool or your Rolex wristwatch.

Then, your item’s value is appraised. If the value of the item is high enough to give you the type of loan you want, the pawn shop will offer you the loan. The pawnbroker will keep your item in a safe and secure place until you completely pay off the loan.

The amount you receive will most likely be a fraction (about 50%) of the item’s current market value. If you’re not able to pay the loan back within the specified time, your item will automatically become the property of the pawn shop.

You may sell your item outright to the pawn shop instead of settling for a loan. But if you’re sure that the amount you’re receiving as a loan is enough to meet your needs and you can easily pay back the interest and the service fee, then you are better off going with the loan.

How Much Are Pawn Shop Loan Interest And Fees?

In most cases, collateral loans offered by pawn shops will have a fixed interest rate. That rate is 10% plus a $3.00 service fee on all loans over $100.00 dollars. So if you take a loan for $500.00 you would owe $553.00 to pick that loan up within 30 days. Loans under $100.00 have a slightly higher interest rate that is progressively higher as the loan shrinks. The highest rate is on a loan for $10.00. A $10.00 loan would cost $13.00 to pick up within 30 days.

If you can’t pay back the principal (the loan amount), plus interest, in full within the 30 day time period you have the option of paying the interest only. By doing this the loan will be extended by an additional 30 days within which you can pay the full amount of the loan and interest and pick up your item(s).

After 30 days have passed since the issue date of the loan it will need to either be picked up or have a payment of the interest paid towards it to extend the loan. If no payment is made the item is forfeit and becomes the property of the store.

We do, however, give a 5 day grace period past the maturity date of the loan, at no extra cost to the customer. Beyond that, we wait until a loan is at least 15 days late before we forfeit it and put it out for sale. After the 5 day grace period a late fee will be applied to the account

In most cases, collateral loans offered by pawn shops will have a fixed interest rate. We charge just 10% on the loan plus a service fee of about $3. So, if you take out a loan for $500, you’ll pay back $553 after 30 days.

Contact Us to Get a Collateral Loan at Our Pawn Shop Today

If you have a valuable item you can use as collateral for your loan, please bring it to any of our pawn shops in Virginia. We can also buy your item outright if you want to dispose of it for quick cash.

silver and gold jewelry on display at a pawn shop

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    Testimonials What Our Customers Are Saying

    Ernie A.

    Great store. I’ve been going there for years and they’ve always treated me good. Great products service!

    Carola H

    Great customer service and affordable prices. Super happy with my purchase

    Mia I.

    My husband picked up our engagement rings from here, best day of my life. thanks route 50 for the great selection. I was very pleased

    Brad B.

    The guys were really honest and straight with me. I went to other shops in the area such as jewelry exchange of tysons and got much much worse treatment. Other places you find either stuck-up trashy people, or extremely rude cut-throats. These guys were regular, nice, and fair; explaining the process to me and how buying/selling and pawning things work. I’d recommend them to a friend.

    Michelle P.

    Never disappointed. Excellent customer service, very friendly. Very clean store. Great selections.