One of the main advantages offered by pawning is the possibility of obtaining a loan almost immediately and with the possibility of recovering the items placed on account. However, there are some disadvantages to take into account.
The health crisis due to Covid-19, the inflation that derives from the increase in the cost of the basic basket and really all the services available, have forced Mexicans to seek solvency for their expenses through bank credits, loans and pledges.
On average, just over 13 million people in the country go to pawnshops annually and 50% of them provide jewelry to obtain a cash equivalent and be able to pay other expensesaccording to the National Survey of Financial Inclusion.
What is a pawn shop?
It is an authorized and regulated institution in charge of offering credits —quick loans— in exchange for personal property. As we mentioned before, the financing of the money is instantaneous.
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This means that there are no application processes or waiting periods. Pawn shops grant the money at the time and place of the guarantee that you are willing to deliver.
These establishments accept almost any item as backing for the money that is awarded. And it is the ‘lender’ who assesses your status and decrees the amount of cash that can be given to you according to its value.
How convenient is it to pawn?
Although pawning an item gives us the right to claim it later—as long as we can pay for it—the money we are loaned is not always the equivalent of what our possession is actually worth.
For example, if you pawn a video game console that is priced at 5,000 pesos in the market, the pawn shops will not give you the same amount, but only a certain percentage.
It should be noted that these institutions charge interest —which can be calculated per day or month— and even for protecting the garment. This in addition to VAT, so in theory, you would end up paying much more than what they lent you to get you out of trouble.
In this exchange of goods (of your item for money), a contract is signed and a deadline is stipulated to finish paying and recover what you have pawned. In case you do not liquidate, the house puts your object up for sale.
Is it better to sell than pawn?
The concept of selling requires no further explanation: You put a price on your goods yourself, you get paid for them, but you never see them again. For this reason, when it comes to jewelry or memories that have a greater sentimental charge, people resort to commitment.
So what is better? Everything will depend on whether you want to recover the object. If you are not interested, then selling it abroad is a better option, they will give you more money and thanks to the Internet it is easier to find reliable buyers.
Meanwhile, if the necklace or chain that can save you from trouble is a gift or family heirloom, you can go to a pawn shop knowing the rules. Some of the most reliable in Mexico —according to Profeco— are:
- National Monte de Piedad
- Montepio Luz Savinon
- Rafael Donde Foundation
- Easy Pawn
- Prendamex
The last:
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