About 30 million Americans use a pawn shop each year. One of the most commonly pawned items is electronics. But did you know you can pawn bigger items, like your car?
If you decide to pawn your car, you can potentially generate a much larger cash flow. This is an enticing possibility if you’re facing an expensive emergency and need a large amount of cash quickly.
There are some things you need to know before you get started, though. Follow this guide to understand the process of pawning your car.
Understand the Process
The requirements and process for pawning your car will vary slightly from state to state. Be sure you check your state’s requirements, so you understand any differences from this guide. As a general guide, there are a few things you must have.
Have a car
You’re listed as the owner
Free of liens
Proof of income
You need to own the car outright because the pawn shop doesn’t want to worry about another creditor claiming ownership to the vehicle. You need to show proof of income to show that you can repay the loan.
Valuation of Your Car
When you arrive at the pawn shop, you’ll discuss how much you hope to borrow. Then your car will be assessed for value. They’ll look at the make, model, year, and condition.
Most locations will require you to leave the car with them when you pawn your car for cash. This is different from a title loan, where you’re commonly allowed to continue to drive your vehicle.
Kelley Blue Book
If you want to get an idea of what your car is worth, use the Kelley Blue Book. This valuation resource is what the majority of people use to determine the value of a vehicle.
Terms and Cash
The biggest advantage of a car pawn is that you walk out with cash. You can also negotiate the terms of your agreement with the pawnbroker. This lets you customize your loan to ease your financial burdens.
No matter what terms you agree to, expect the pawn shop to apply an interest rate to your loan. You’ll need to repay this amount in addition to the original amount you borrow.
You’ll find that a pawn broker is willing to lend you more than other lenders. This is because they keep the physical car, so they have more security in their loan.
Repay Your Loan
Once you take out the loan, you’ll need to make payments. Do this in accordance with the terms you’ve agreed to. Once you’ve repaid the entire loan, the pawn shop will return your car.
You can then choose to keep your car or pawn it again. There are no limits to how many times you pawn your car, as long as you continue to repay each loan.
Pawn Your Car Today
If you’re facing an emergency and need cash immediately, then you may want to pawn your car. You’ll need to give up physical access to your car, but you’ll be able to get cash immediately and on better terms than other lending options.
Browse our many finance articles for more helpful advice on how you can live financially secure.