Pawning a diamond ring is a good way to raise money in the short term. But if it's a wedding ring that has a special significance to you, you might be eager to make sure you're not jeopardizing this important item. Here are some things to know before you pawn a diamond ring.
Understand How Pawning a Diamond Ring Works
When you pawn a diamond ring, it can be a very secure process if you follow through on the debt by the set time. The pawn shop uses the ring as collateral to loan you money, and it's often a key option if you have bed credit. The pawn shop is legally obligated to hold the item for you until the agreed upon date. If you make the repayment by this date, or make a partial payment that is acceptable to the pawn shop, your contract can be extended.
As long as you make partial payments and stay on top of the situation, a loan from a pawn shop can be a very good loan source. Their goal is to work with you; it's financially beneficial to them if you leave happy with your service and are interested in returning if you get into another financial bind. And it's not in their best interest to sell the item.
How Does it Compare to Other Options?
Let's look at a few other options for short term loans. Payday loans are common, but it requires you to show proof of employment. The interest rates are also much higher. Hard money loans use a home as collateral instead of luxury property. Since you're risking something more expensive, it's better to save these loans for a much more major debt. For small debts, pawning a ring or a similar item is usually a best bet.
What Other Items Are Accepted?
If you have certain other items of interest to the pawn shop, you might be able to use these as collateral instead. Look around the pawn shop to see what kinds of items they accept. Video game consoles, entertainment systems, computers, musical instruments, and jewelry are some of the items that you may be able to use, as long as these items still hold value; in other words, you won't be pawing off your VCR any time soon.
If you are still in doubt about pawing your diamond ring, visit a pawn shop and read the terms of their contract, then look for business reviews. Finding a pawn broker you can trust is key to making this a comfortable loan decision.