“What exactly is collateral lending?”
To begin, let’s start with the definition of collateral. Collateral is simply defined as a security that’s pledged to a lender as a guarantee of repayment for a loan. In simpler terms, your pledged item is the security that backs your loan.
Essentially, the definition itself explains collateral lending in a nutshell. Collateral lending, commonly called a pawn loan, is offering a loan based on the value of the collateral presented. When the loan is paid, you receive your collateral in return.
Collateral can come in many forms. Some of the more common forms of collateral we see at Pawn 1 include electronics, jewelry, and firearms. We also accept items such as power tools, lawn care equipment, music gear, and certain types of collectibles.There is also room for larger items such as motorcycles, boats, automobiles, snowmobiles, RV’s, and ATV’s.
Evaluating your collateral
To receive a collateral loan, the customer will bring their item into the store to be assessed by a pawnbroker. During the assessment, we will ask a series of questions that will help our evaluation. The more common questions, following the initial greeting, include:
Once we make our loan offer, you then decide whether or not you want to accept the offer. Negotiations on loan and purchase amounts are very common during the evaluation process, so feel free to make a counter offer. The pawnbroker cannot proceed with the transaction until you both agree on an amount. In the event you two cannot reach an agreement, the pawnbroker may politely pass on the offer. As a customer, you also have the right to politely pass on an offer.
Testing and Customer Input
When the customer and pawnbroker agree to an amount, the next step is to test the item and input the customers information into our system.
The pawnbroker tests the item to make sure it is functioning properly. Some testing can be more time consuming than others. This is especially true with gas powered items such as lawnmowers, or items that may require assembly to be tested properly. Items that are new and still in original packaging may have to be opened to ensure the product inside matches the package.
After testing the item, the pawnbroker will ask the customer for identification. A current photo ID or drivers license is required to receive a loan in all Pawn 1 store Information such as your name, address, date of birth, drivers license number, and phone number will be recorded in our system.
Next, the pawnbroker will input some basic information from your collateral. This information includes a full description of the item, model number, and serial number.
Storage Prep and The Pawn Ticket
To finish the transaction, the pawnbroker will prep the loan for storage and provide you with a pawn ticket. The pawn ticket matches all of the information that was previously entered into the system.
Located towards the middle of the pawn ticket are the terms of the loan, and loan repayment amounts. The pawnbroker will explain this section of the pawn ticket to the you, but feel free to ask any questions you may have about the loan during this time. Signing the pawn ticket solidifies the collateral lending agreement between the customer and the pawn shop. All that’s left now is putting the cash in your hands.
That’s all there is to it! At Pawn 1 we aim to make our customers feel comfortable during this process. Don’t ever hesitate to ask any questions concerning your collateral or your loan payments. We’re always happy to help you!