Thinking about using a pawn shop loan and wondering if there are any better alternatives out there? Don’t act until you know all your options.
Fact checked
Fact checked
Need a fast, easy way to access money and not entirely sure what’s your best bet? Pawn shop loans provide one possible solution when you’re short on funds – but they’re by no means the fastest or most convenient way to access cash – and using valuable possessions to secure loans can be a high-risk strategy.
So, what’s better – cash loans or pawn shop loans? If you’re wondering exactly what your best borrowing options are, we’re about to compare the two and find out that cash loans come with better consumer protection than their pawn shop equivalent. And what’s more, it’s fast and simple to apply for a cash loan online, without any need for security – you can get pre-approved in just one minute!
Pawn broker loans don’t work like when you borrow money from a bank or an online lender. Instead, borrowers visit a pawn shop and exchange a possession for a short-term cash advance. They typically get up to three months to repay the loan, or they lose the item they pledged.
Payday loans work more like traditional lending. Borrowers apply for a set amount of money and then repay the loan over a period between sixteen days and two years. You don’t need to provide security to get a cash loan.
So, what else makes small personal loans different from pawn broker loans . Let’s compare the possible terms, available amounts, plus security and qualification requirements for each:
| Pawn shop loans | Cash loans | |
|---|---|---|
|
Terms: |
Pawn broker loans generally run for a maximum of three months. Some pawnbrokers offer a rolling contract where as long as you make monthly fee payments, they’ll hold your item indefinitely. |
Cash loans can run for up to two years, although you can repay your loan as quick as just 16 days. |
|
Fees: |
Pawn shop fees also get based on the value of your advance, but that charge tends to get lower as the advanced amount rises. $1,000 loans typically attract an interest rate of 8 – 10%, while a $10,000 advance may only attract half that. Beware, however, that many pawnbrokers charge rates up to 30%, and it’s vital you remember that pawn shop rates get calculated and charged each month. |
When you apply for payday loans, lenders charge capped fees which get based on the amount you borrow. You’ll pay no more than $400 to set your loan up, while borrowers never pay more than 48% of their loan amount in repayment fees over a year. |
|
Security: |
You must provide security to use a pawn broker loan. |
You don’t need to provide any security to qualify for a cash loan. |
|
Amounts: |
Limits vary among different brokers, but it’s not unusual for borrowers to use cars and other high-value items to secure funding of amounts like $20,000. |
You can borrow anything between $2,050 and $5,000 when you apply for payday loans. |
|
Qualification: |
Anybody can use a pawn broker loan. |
Lenders operate according to national guidelines for responsible lending, meaning your credit score doesn’t influence your chances of qualification, but your ability to repay the loan does. |
|
Regulations: |
Pawn shop lenders operate by various regulatory requirements in different states, but you’ll typically just need to provide some basic documents to use one. There are no rules about affordability or consumer welfare with a pawn broker loan. |
All cash loan lenders need to have an Australian Credit Licence which is issued by the Australian Securities and Investment Commission. If they fail to adhere to responsible lending guidelines and play by the rules, they face substantial fines or prosecution. |
Don’t leave your home. Check in with Savvy, get pre-approved and connect directly with the lender, then apply online and get funded the same day.
Borrow only from fully licenced payday lenders and get approved based on your ability to repay the loan without hardship.
No need to stop what you’re doing. If you’ve got an internet connection and a smartphone, tablet, or computer, you can find a lender and get a cash loan application going.
You just can’t get faster funds. Just fill out Savvy’s quick form so we can locate your best options, hit send, then get conditional cash loan approval in one minute flat.
Borrow for how long you need. You can choose to repay over terms ranging from 16 days to two years.
Why risk your valuable possessions? Budget to pay fixed, capped cash loan fees for a finite period that suits your means with no security required.
No matter the time of day or week, you can complete your small loan application with us online.
You can receive an outcome in 60 seconds and, if successful, have your money sent in just one hour.
We're partnered with reputable Australian lenders to bring you greater peace of mind when applying for your small loan.
You can apply for a payday loan 100% online at any time of the day or night, and lenders often transfer funds within a few hours of formal approval.
You’ll need a few essential documents to support your cash loan application, and you can upload everything via the lender’s website.
You can use your passport or driving licence, a Medicare card or citizenship certificate, and a utility or phone bill for this.
If you work, the lender will ask you to upload your last three months’ payslips. Borrowers can still apply for a cash loan on Centrelink, but they will need to download a Centrelink Income Statement via their MyGov account.
Lenders use secure software to gain read-only access to your bank statements so they can check your daily spending and confirm your income.
Once your cash loan is approved, lenders send a contract, which you can also sign digitally. After that’s been reviewed, the loan provider will settle your loan.
Cash loan lenders transfer funds directly to your chosen bank account as soon as your application gets approved.
Disclaimer:
The information on this website is of general nature and does not take into consideration your objectives, financial situation or needs.
For loans between $2,050 and $5,000, the APR is between 21.24% (minimum) and 48% (maximum) per annum. Comparison rate of 65.4962%. Minimum term is 16 days and maximum term is 24 months. The cost of the loan is a $400 establishment fee and monthly interest charged on the amount borrowed. For example, a loan of $3,000 over 3 months with an APR of 48%, (comparison rate of 65.4962%), will have an establishment fee of $400, monthly repayments of $1,225.20. Total repayments of $3,675.60 and total interest payment of $275.60.
Warning: A comparison rate indicates the true cost of a loan. Comparison rates are true only for the examples provided and may not include all fees and charges. Different terms, fees or loan amounts might result in a different comparison rate.
Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.
For more information about us and how we conduct our business, you can read our privacy policy and terms of use.
© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.
For more information about us and how we conduct our business, you can read our privacy policy and terms of use.
