You're in urgent need of extra cash and about to take a loan against an engagement ring. Not only do you receive cash right away, it won't affect your credit score. You have the chance to redeem your item when you repay the pawn loan plus the small fee associated with it. But what happens if you don't reclaim your pawned item? Below are your options if you forget to — or are unable to — repay your pawn loan in time.
What Is a Pawn Loan?
Many people use their valuables to help make ends meet. Often a pawn loan is the best approach when an unexpected need for short-term financing arises. With a pawn, the borrower brings in the item they want to use as collateral along with their government-issued ID. The loan value is based on a portion of the item's value. The borrower repays the loan in full, including the fee, to get their item back.
Know Your Alternatives
Unlike other types of loans, a pawn gives the borrower several choices. You may repay the pawn loan to reclaim the item, pay the interest to keep the loan going for a while longer and keep the account current, or choose to keep the money by not repaying the loan — forfeiting the pawned object.
Repaying Your Loan (or the Interest)
You may repay the pawn loan to recover the item on or before the due date. If you can't repay the loan in full when it's due, you may pay at least the interest by the due date to keep the account going and renew the loan. You'll be charged an additional fee each time you extend, based on the amount remaining. It's best to pay the interest plus any extra you can put toward the principal balance.
What to Do if Your Item Is Forfeited
Although it shouldn't be relied on, it's not unheard of for a forfeited item to be repurchased later at its listed price by the person who pawned it. A forfeited item that remains available for sale may have its pawn reactivated for the interest due, or be paid out, if all pawn elements are still available.
There are multiple paths available when you take a pawn loan, and recovery may be possible even after your pawn's active period has expired. Be informed of the alternatives available at the time of your pawn transaction.
If you have an item to pawn or sell, connect with DD Pawn Loans.