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Typically,
Indianapolis pawn shops will offer 50-60% of the resale value is
offered as a loan to the individual wishing to “pawn” their items. Provisions will be made
for repayment of the short-term loan (usually somewhere between 30 and
90 days), and should the individual not repay his or her short-term
loan within the designated period, the item offered as collateral
become the property of the pawn broker.
What is a
Indianapolis pawn broker? The
definition is “a small lender who lends money at a high interest rate
and holds some of the borrower’s personal goods as collateral to be
sold to the public in the event of default”.
In Indianapolis, as well as the rest of the
state of Indiana, there is a war against payday loans and short-term
loans, as well as the pawn brokers who offer these paycheck loans
services. Many feel
that payday loans and short-term loans are just a modern form of basic
loan-sharking.
The problem
seen with this practice of Indianapolis pawn shops is that the interest
charged on such high risk paycheck loans (where no credit check is
involved) is often considered “exorbitant”, with regulations in
Indianapolis and the rest of the state allowing up to a $33 transaction
fee on every loan and up to 36% interest yearly on payday loans up to
$300. As of the
year 2001, 23 states carried regulations specifically prohibiting
payday loan practices.
Why would
someone go to Indianapolis pawn shops to receive a short-term loan
instead of a standard lender, like a bank?
Often, those who need short-term loans either
do not qualify for a standard loan or are in need of immediate cash. Others are return
customers, often pawning the same item or items multiple times to
receive a short-term loan, perhaps in advance of their paycheck.
Indianapolis
pawn shops provide a service in offering short-term loans that
borrowers cannot find elsewhere, and if you are living in Indianapolis,
you should watch closely this battle in hopes that pawn shops are not
taken out of commission. This
paycheck loans service has become a necessary evil that aids in paying
bills on time.
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