If you currently have no job, a poor credit rating or both, then the task of getting approved for finance can seem virtually impossible. With most forms of finance, you wouldn’t get a loan if you have a bad credit score or you’re unemployed.
It’s not the end of the road, though. There is another option that doesn’t involve credit or employment checks. It’s a secured loan in the form of a Pawn Loan.
What Is a Pawn Loan Exactly?
If you’re only after a really small loan, you could just go to a pawn shop and hock a guitar, TV or something of similar value. On the other hand, if the amount you need to borrow is more significant and over $2K, then you can approach a private lender that offers the Pawn Loan option.
Private lender Pawn Loans in Australia are becoming increasingly more popular as an alternative to applying for more traditional finance, such as a Personal Loan. Pawn Loans are secured loans of a high value and involve leaving either a vehicle, boat, expensive jewellery, designer watches or even business equipment, with the lender until you’ve repaid the loan in full.
Pawn Loans work on a similar principle to a pawn shop, but loan amounts are on a much larger scale.
If you have something of significant value that you can use as security against the loan, then it’s very likely you’ll be eligible to get a Pawn Loan from a private lender that offers this type of loan.
What Pawn Loan Documentation Is Required?
Any type of finance application is going to require some documentation and paperwork. The good news is, the documentation required for a Pawn Loan is minimal.
Let’s say you want to use your late model car as collateral for the loan. You would need to show the lender the car’s registration papers, along with being able to prove your identity. As far as documentation goes, that’s about it.
The only other paperwork will be the loan contract that you agree to and sign, that stipulates the loan amount, what you’ll owe in total and the terms and conditions of the Pawn Loan.
It’s all very simple and takes very little time at all, unlike the paperwork process you need to go through for other types of finance.
The Pawn Loan Approval Procedure
Staying with the car example, if you decide you want to get a loan against the value of your car, you simply drive your car down to the lender’s premises and they evaluate it to determine its current market value. Once that has been decided, a loan amount can be negotiated.
The way it works is this:
Generally, you’ll be able to borrow up to 60% of your car’s current market value. If your car is deemed to be worth $25K in the current market, you’d be eligible to borrow a maximum of $15K. There will be a minimum borrowing limit, usually around the $2K mark. So in this example, your borrowing range would be anywhere from $2K up to $15K.
Once an amount is decided upon, it’s simply a matter of providing the documentation mentioned earlier and signing the loan contract. Very likely you’ll have the money you need deposited into your account that same day. You then leave your car with the lender until the loan has been repaid in full, after which your car is given back to you in pristine condition.
Because it is a secured loan, there are no checks on your credit history and you don’t have to prove you are employed.
The only other criteria is that your vehicle can’t have travelled more than 150,000km and must be less than 10 years old.
Most people will own a vehicle or something else of significant value, so if you need finance but your credit rating is below average or you don’t have a job, you still have options available. Pawn Loans are safe, secure and a rapid way to get your hands on the money you need, when you really need it.