What is a pawn credit?

A pawn credit is a small loan that you receive from a pawn shop against a security. In order to obtain a pawn loan, you must deposit a valuable item with the pawnbroker. The amount of the loan is calculated by the pawnbroker on the basis of the collateral value of the pawned item. Most of the time, watches, precious stones, diamonds, precious metals, jewellery, smartphones, tablet PCs as well as high-quality devices from the consumer electronics category are awarded. After you have repaid the agreed release sum, the pawnbroker will return your valuables to you. The agreed trigger amount consists of the pawnshop’s fees, interest and the loan amount.

Advantages of a pawn credit

The provisions for pledge lenders are bindingly prescribed by the legislator. That is why you as a consumer are on the safe side when you make use of a pawn credit. Further advantages of a pawn credit:

• high security of the deposit security (insurance during the storage period)
• fast, uncomplicated payment of the sum of money
• Exact and quick value assessment by experienced appraisers
• no credit check
• no Schufa entry
• full transparency

How do you get a pawn credit?

A pawn loan is characterised by uncomplicated processing. You do not have to present proof of your solvency or a salary slip to the pawnbroker. In order to conclude a contract with the pawn shop, it is sufficient to present your identity card. A pawn credit agreement is usually concluded for a term of three months. If you fall ill during the term, the pawn shop will grant you a waiting period of four weeks.

In order to obtain a pawn credit, an identity document (passport or identity card) and the asset you wish to lend to the pawnbroker. The latter assesses the pawned object and fixes a price for the object. As a rule, 50 percent of the resale value of your pawned item is paid out to you as a loan sum. If you agree with the conditions, a pawn loan agreement will be drawn up and signed. At the end of the agreed term, you will receive your valuables back against payment of the release fee.

Costs for a pawn loan

As already mentioned, the pawnbroker will pay you 50 percent of the resale value as a loan sum. The longer the term and the higher the loan amount, the more expensive a collateral loan is. On average, the monthly cost of the loan is between one and two percent of the amount paid to you. You will also be charged for the insurance and storage of your valuables and the statutory valuation fee.

The following example: Up to a loan amount of 300 Euro you have to pay 1 percent interest + a flat fee of 6.50 Euro per month. Per month your pawn credit costs 9,50 Euro. You only have to pay for the time for which the borrowed item is actually in the lending house. You can shorten this time at will. If you extend the term, you will incur additional costs per day. If the amount of credit exceeds 300 Euro, the interest rates are no longer bindingly specified by the legislator, but must be negotiated by you. A loan from a pawnshop can therefore be expensive under certain circumstances.

Who should go to the pawnbroker?

Going to the pawnbroker is particularly worthwhile for you if you can quickly redeem your loaned valuables. However, if you do not have the money to buy it back, you will have to extend the term. Thereby you incur additional costs.

A visit to a pawnshop can be an option for you, for example, if you are self-employed and need additional cash so that you can quickly make an investment.

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