Car pawnshop - a great opportunity and an idea for a business
This interesting article I read today in one of the sites. Interestingly, this is not only a great opportunity to purchase a car, but an interesting business idea that can really bring to life and make its stable business.
Pawnshop credit under a mortgage or car - an opportunity to fairly quickly and just get the money, leaving a mortgage for your car. More formal definition: Pawnshop - is the process of providing loan (borrowed) funds to the borrower on the principles of payment, repayment, maturity and availability of mortgage.
What is the difference between credit and Pawnshop?
First: when obtaining a loan, even under a mortgage liquidity, the bank will still assess the financial condition of the borrower and usually require a formal confirmation of its (earnings statement / reporting business entity). This requires a much longer period of time for a decision, compared with Pawnshop. In addition, the bank can always refuse and then have to reinitiate the whole procedure is already in another bank. Turning to the Pawnshop, you can get the required amount within 2-3 hours, it does not require anything other than the borrower's identification (passport, identity number) and a car that is laid (technical passport). Consequently, agreeing with the Pawnshop market value of the car on your hands quickly you can get the amount of 50%, 60% or even 80% of its market value. This is certainly a plus. A small negative difference lies in the second.
The second difference: if loan collateral (the car) is the owner and they may be used. At Pawnshop, a car made in the mortgage, after receiving the money the borrower is required to leave your car at the site Pawnshop. Accordingly, you can get it back after the loan repayment.
There are also unsecured, or consumer loans, where the bank does not require collateral. If the borrower has no car or other liquid assets, then this option is, in fact, the only one. Otherwise, consumer credit has the same disadvantages as mortgage lending, to which you can add one more - the rates for this kind of lending is equal and even higher rates of Pawnshop.
How to choose an organization that provides Pawnshop?
When choosing an organization that provides Pawnshop, you should pay attention to, in essence, on two criteria: security and condition of receipt.
As already stated, upon receipt of money in the Pawnshop, your car will need to leave on his site. Therefore, we need to understand exactly where the car is left and what responsibility it bears Pawnshop. The latter can be seen in the pledge agreement (preferably notarization) and / or custody. The organization, which takes the car to his site in the mortgage, should be held for him full responsibility. In addition, the contract Pawnshop should set out clear conditions for receiving the car back and it was after the repayment of the loan amount and interest stipulated in the contract (other payments). Where exactly is left to auto, as will be seen from the agreement. Are worth noting, whether well protected area, how many and what cars are already on the site, whether the site is viewed from the street - so the borrower may at any time to verify the integrity of your vehicle. Again, if properly designed contract and notary decorated - such fears are groundless and do not worry.
Now conditions. Laying his car at a pawn shop, you can encounter the following types of fares, rates and conditions:
1. The interest rate on credit is established on the size of debt to the Pawnshop and can be expressed as an annual, monthly or daily percentage. For example, 0,3% daily or 10% per month (depending on the number of days per month) or 120% APR. Interest in the Pawnshop paid, usually monthly or at maturity loan.
2. The fee for a loan. Can be set as a percentage from the amount as either a fixed amount. Paid immediately upon receipt of credit.
3. Fee for storage of the vehicle. Is normally installed as a fixed amount per day / month actual location of the vehicle at the site Pawnshop. Pay either immediately or in repayment.
4. The fee for notarization of contracts. Established by a notary and depends on the amount of loans issued and the estimated cost of the car.
5. The fee for an expert assessment of the car. Set as a fixed amount and is paid immediately upon receipt of credit.
6. Term of the loan. As a rule, from one to six months. Sometimes, of course, and the term is less than a month, but this is an exception. More than six months to grant the loan the pawnshop is difficult because automobile market in this country is not highly predictable and can be a situation where the market value of the car will fall sharply, thereby becoming less secured loans.
7. Early repayment of the loan. Sometimes present, but rarely used by the borrowers.
To determine the best conditions, of all the above to come to a single indicator. The easiest way to do this by calculating the amount of payments per month or, if the loan is taken for a longer time for the entire period.
Some examples:
* Amount received in the Pawnshop - 10 thousand dollars.
* Pawnshop rate - 8% per month.
* Fee for obtaining a loan (credit) - 1%.
* Vehicle storage fee - 1.77 dollars a day.
* Fee for notarization - $ 200.
* Fee for expert evaluation of the car - $ 47.
* Credit is taken for a period of 2 months.
Total for the entire period credit will need to pay: 800 * $ 2 (interest) + $ 100 (room for the issue) + 108 USD (for storage) + $ 200 (lawyer) + $ 47 (score ) = 2055 dollars. Consequently, the effective (apparent) rate for the use of such loans was 123.3% per annum, or 10.3% per month, or 0.35% per day.
Further conditions can be compared. In another pawnshop rate can be set at 10% per month (which, at first glance, it seems longer), and the remaining payments are not available. Consequently, this Pawnshop was profitable. And in a pawnshop, where, apparently, offered a low rate of 8%, it grows at the expense of the masses of additional payments.
