Difficult times can hit us all without any warning. During these times, when we need money immediately, jewelry secured loans can be a lifesaver. Most people look down upon these loans because of their prejudices and biases, but these loans are a lot better than you think. Using jewelry as loan collateral has many distinct advantages that are often overlooked by most people. Not only are these loans super fast and easy to get, but they’re also easily available at multiple places.
You can take a loan on your jewelry as collateral if you’re in urgent need of immediate funding. However, there are a few things that you should know before you decide to take the step. There are some things that many people aren’t aware of when they’re taking a loan like this and this often leads to surprise and disappointment. By discussing these pitfalls and hidden caveats beforehand, we can avoid any issues in the future. So without any further delay, let’s get to it and find out all you need to know about using your jewelry as collateral for a loan.
1. Interest Rates
At the end of the day, all lenders in California will provide you with money in exchange for your jewelry so that they can make money. How these lenders make money is by charging you interest on the principal amount. This is something that most people ignore since they feel like a one to two percent increase in interest rates isn’t much. However, it can make a huge difference in the overall amount you have to pay back to the lender to get your jewelry back. Be extremely careful when choosing a lender and compare the interest rates of all the lender options you have. Pawnshops and secured lenders have different interest rates and opting for the lower one is always better for you.
2. The Lender
There are many different types of lenders who are willing to loan you out some money in exchange for your jewelry as collateral. There are pawn shops, secured lenders, and even banks to help you out in your time of need. However, all of these lenders will have different policies and you’ll have to compare them yourself. Some of them will provide a loan much easier than others; the owner of a Pawn Shop in Los Angeles says that they give out loans without as many formalities as banks. Another thing that differs is that some lenders provide a loan for a larger fraction of the item’s original price. So make sure that you’re getting the best balance of all these features for an easier time.
3. Determine the Value
While most of the reputed lenders do this bit for you, it’s still a good idea to get your jewelry’s value appraised by a professional. This will help you understand how much your items are actually worth so that you don’t give them away for only a minor fraction of their price. This is a totally optional step but it’s highly recommended that you do this because it can give you an advantage and you can take a larger loan for the same piece of jewelry.
It’s clear that you’ve taken a loan on your jewelry instead of just selling it because you want to get it back at some point in the future. You’ll have to make regular payments to get your items back and it varies with the lenders as well. If you’ve taken a loan from a pawn shop then you shouldn’t default on your payments or else your item will be sold at a higher price than what you got. Banks might be a little more lenient but they’ll also charge you a little defaulting fee if you fail to make a payment. It’s best not to fail at making your payments or else it’ll result in a financial loss for you only.
These are some of the things that everyone should know before they use their jewelry as collateral. These kinds of loans can be a godsend during desperate times when you urgently need some money but can’t find anyone who’s willing to loan you the money. It’s also much better than using your car or house as collateral if you need a smaller amount. This loan is a double-edged sword that can be immensely useful if used properly. However, make sure that you do recover your jewelry back because its value is obviously much higher than the amount you’re being offered.