Payroll Loan Or Pawn Shop: Which Is Better?

Prior to the beginning of the payroll loan industry, the usual way to obtain a cash advance was by a pawn shop, and because some people find dealing with pawn brokers cumbersome and embarrassing they failed to receive the financial help they needed.

Pawn shops offer their customers secured loans, meaning the collateral of your loan is by something of value. You bring in something you own and if the pawn shop is interested, they'll offer to make you a loan using a small percentage that's usually 10% to 40% of the items resale value. The pawn shop will hold the item for a period of time, usually forty five days or less, during which time you can redeem the item by repaying the loan amount plus any loan fees. If you fail to redeem the item within the allotted time period, the pawnbroker takes ownership of your property and will resell it usually at a substantial profit.

Attempting to streamline the process, many pawn shops now offer establishing pawn value for their customers online. Potential borrowers simply email their loan request along with a brief description and photograph of the item they are considering pawning and subject to a physical inspection by the pawn broker, get their loan request pre-approved.

Unlike pawn shops which can charge substantial storage, insurance and loan fees because they collateralize their loans with your personal property, payday lenders do not require any collateral at all. You're loan request is simply based upon your steady employment and ability to repay. The application process is simple, focusing usually with only a few questions about you and your employment history, and credit history is seldom an issue, which in part explains why credit challenged borrowers seem to find payroll loans an attractive alternative. Usually all the borrower needs is proof of gainful employment, a bank account statement and a sincere willingness to repay their loan on time. Just answer a few simple questions and usually you'll receive your money quickly, sometimes the same day that you apply.

The U.S. Department of Commerce reports that in 2012 more than 23,000 payday lenders processed more than ten billion dollars in payroll loans. And all forecasts indicate that number will continue to rise. The factors influencing why payroll loans have become so popular are many, but payroll loans aren't for everyone. Whether a payroll loan is right for you depends upon your individual circumstance and while the fees associated with a payroll loan may seem significant, when compared to bank and credit card overdraft, over limit or late penalties, obtaining a payroll loan may be a smart solution. Nonetheless, you should use payroll loans wisely.

Occasionally, everyone faces an unforeseen obligation, so when those unexpected emergencies arise, a payroll loan may be your option. But remember, an online payday lender payroll loan must be repaid quickly and is only a short term financial solution to help bridge the gap between paydays and are not designed to satisfy long term debt.

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