If you need cash to cover unexpected expenses, one option that you should explore is taking some of your possessions to a pawn shop. At the pawn shop, you will have the option to pawn or sell the items. It is important to understand the difference between the two processes so that you can make the best decision for your needs.

Pawning an Item

When you pawn an item, you are taking a loan against the item's value. The pawn shop will examine the item to decide how much the shop is willing to lend you. Traits like the item's condition and saleability of the piece are taken into consideration; your credit and income are not. This makes pawning your possessions an excellent way to procure a loan if you can't prove your income or have bad credit. 

The length of your loan will vary based on your state and the pawn shop's policies, but they generally last anywhere from 30 to 90 days. Some pawn shops require regular payments during the term of your loan, but others permit their customers to pay the loan in full at the end of the term.

Your final amount due includes any interest or fees associated with the loan. You do not receive your item back until it is completely paid off. If desired, you can pay the loan off ahead of schedule.

You may struggle to repay your loan on time. If so, ask the pawn shop for an extension on the loan. Many offer this service to customers who are struggling with repaying their loans.

Selling an Item

When selling your item to the pawn shop, you do not have to repay the money that you receive. Instead, the pawn shop takes immediate possession of the item. If you know that you want to permanently get rid of the item, selling it to a pawn shop is an easy way to do so. The payment you receive depends largely on the item's condition.

You do have the option to negotiate the price you receive for your item. If you need to maximize your payment, consider selling your item instead of pawning it. Pawn shops normally pay more for items that they buy outright because they do not have to worry about storing and securing the item while you repay your loan.

What Happens If You Change Your Mind?

It is easy to change your mind if you decide that you no longer want to get your item back. If you don't repay your loan, the pawn shop will seize the item to cover your debt. Your loan is then converted into a sale.

If you need extra cash, consider going to your local pawn shops to procure a loan.