Are Pawn Shop Payday Loans Smart Loans?

By Shawn Lee Martin

pawn shop payday loanWhen we first found out that pawn shop payday loans were the new thing we scratched our heads and had to ask ourselves why the pawn shops were going into the payday loan business.

When we started running the numbers we were stunned!

It made complete sense that they would choose this type of service to offer considering the huge profits involved in these loans.

Since the pawn shops will be offering both types of loans his article will explore them and how they stack up against each other, which is better and why.

Let’s start with payday loans!

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Payday Loans

A payday loan is a loan where you borrow money against your next payday.

All you need to take one out is proof of $800.00 or more monthly income and a checking or savings account.

Having bad or no credit is fine, as long as you meet the income and have that bank account you will be given the loan.

You can get these loans at stand-alone storefronts and now some pawn shops or there are countless online payday loan companies.


Be care when using the online companies!

while you can get same day cash within 2 hours in most cases they are set up completely different than store-front payday loans. You can learn more about them here.

How they work is they charge you a counter fee and a set amount of interest for the loan, and this loan will come due on your next paycheck.

The fee for a $500.00 two week loan is $150.00!

While this is extremely high interest the money is there and available for emergencies and when the loan comes due it will be paid in full and over with.

Pitfalls Of Payday Loans

The downside besides the high interest is these companies make it way to easy to get caught in the payday loan trap.

They allow clients to “roll over” their loans.

In other words, they allow the client to just pay the counter free and the interest and extend the loan to their next payday, thus adding a new counter fee and interest charge to the original balance.

This can lead to getting caught in the payday loan trap.

Pawn Shop Loans

Pawn shop loans are completely different than payday loans.When you take out a pawn shop loan you as basically borrowing money on something you own like a lawnmower, ring, china, etc…. which is called pawning an item.

The unwritten rule is they will borrow you half of the resale value of the item or items you are pawning.

How it works is you borrow the money and leave the item at the pawn shop and get a pawn ticket for said item.

The loans are 30 days and to get your item back you must pay the loan back plus any interest owed.

The interest is pro-rated by the day so you are free to let the item sit for 30 days or pick it up in as soon as a day or anytime in between and the interest will be figured out at that time.

The rates are not bad and figure out to be about  $15.00 per $100.00 borrowed.

If you do not pick up the item withing the 30 days the store will keep the item and you will owe nothing.

You may also extend pawn store loans and you must be very careful not to abuse this feature as it could cost you considerable amounts of money, many times exceeding the value of the items pawned.

Our Thoughts

When a person needs money in an emergency and can not get it anyplace else a payday loan can make sense.

Payday loans are safe to use if you follow these three simple rules!

  • Borrow ONLY what you can afford to pay back on the 1st due date
  • PAY OFF the loan on the first due date
  • NEVER extend a payday loan

You will be paying a large one-time interest rate and if that is understood and you are OK with that, you could safely take out a payday loan.

A pawn store loan is a safe and easy to get money in an emergency for people who need it and can not get it anyplace else as long as you follow these simple rules:

  • Only pawn what you could afford to pay back in 30 days
  • Never extend a pawn shop loan

If you follow these two rules you will be fine!

You will also have the option of just leaving your pawned item or items there and not have to even pay the loan back at all.

Take a close look around the house and maybe pick items you no longer need that have value!


There we have it, all the dirt on payday loans and pawn shop loans.

I hope this article helps you in making a healthy choice should you find yourself in need of getting cash by one of these methods.

We want to hear from you!

If you have any questions or comments please leave them below, lets chat!

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16 thoughts on “Are Pawn Shop Payday Loans Smart Loans?”

  1. We really need some extra cash this month, so this is great. Pawn shops seem like a great way to get a loan, as long as we can pay it off in thirty days, like you said. We only need a hundred dollars or so, so that should work!

    1. They are a good place for a one-time high-interest loan but make sure you pay it off on the first due date and do not ever extend it, that is how these things blossom into a nightmare!
      If you are just pawning an item the same rules apply!
      Good luck!

  2. Hey man I really enjoyed reading your post. I really like how you broke down the different aspects of a payday loan and the best ways to pay them back if you are going to get one.
    I wish I came across this site a few months ago, as I have acquired some small debt to some payday loan companies because I didn’t completely understand the terms. Great info man!

    1. Hi, Gabe!

      Thanks for the comments and feel free to give us a call at 1-877-280-5100 if you need any help!


  3. Man Shawn Martin, thanks for this super informative article on the difference between pawn shop loans and payday loans. To be totally honest, I had no idea that those were differences between those loans. I had always thought that a loan was a loan regardless of where you get it from. Now I am aware of the traps these companies set in order to lure people in and get more money.

    1. Hi there!

      Yes, there are many differences in loans depending on many variables.

      Glad you enjoyed the article and if we can ever help you with any payday loan debt please feel free to holler!


  4. I had no idea that there was a difference between a Pawn Shop Loan or a Payday Loan. This was informative and like that you offer a pathway for someone who does get caught up in the trap. It is good to know about these services in those emergency cases. It is never wise to take off a bigger bite than you can chew.

    1. Hi, Craig!

      I agree that it is never a good idea to get in over your head but it happens everyday!

      That is why we are here, to help people when they need it.

      Glad you liked the article!


  5. I learned a lot from reading this! I really had no idea how either type of loan worked. I was always weary of the payday loans. However, it’s good to know that it is an option when you are needing fast cash in an emergency. The key as mentioned is not to abuse the service and end up trapped in interest and fees. Thank so much for outlining the differences between the loans in an easy to understand manner. It is also good to know that they are both relatively safe options when used responsibly.

    1. Hi, Eartha!

      That is the key, to use them correctly!

      I have seen so many not follow this advice and pay dearly because of it.

      Thanks for stopping by!


  6. I don’t think any payday loan company is a viable option unless you’re going through some serious financial trouble like literally paycheck to paycheck (spending every single dime on payday). Even then, this just means you must turn to a second income.

    1. You would be surprised how many people in the USA live exactly like that, from paycheck to paycheck. One emergency comes up and it can really cause turmoil for many.
      That is why we are here, to help clean up the turmoil 🙂

  7. So I stumbled across your website because I needed some advice on pawn shop loans, I wanted to know if they were safe and you have helped me realize they are safe, if you stick to the simple rules and don’t lets your loans roll over, and make your payments on times.

    Thanks for this help! I appreciate it!

    1. Hi Joshua!

      Glad you found us and thanks for leaving a comment!

      Yes, they can be the safest loans around if used properly!


  8. Payday loans do cause misery for a lot of people, as I think they prey on the desperate, who quickly find themselves locked in a cycle with no way out. Pawn shop payday loans do seem to offer a better option, as they offer a potential safety net for the borrower if they can’t repay. However, if you are going to go down this route, it would be a good idea to only pawn items that you are prepared to lose.

    1. Hi, Daniel!

      I agree, only pawn what you can live without or do not want any more.

      It is a great way to get cash for items you would otherwise have a hard time finding a buyer for.

      Thanks for stopping by!


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