How to Borrow Against Jewelry

Borrowing against jewelry provides a quick way of obtaining cash.

Options for obtaining money in a hurry can be limited. It is not always possible to borrow against credit cards or obtain bank loans. Friends and family may be unable to assist during difficult financial times. Some have turned to payday loans to bridge temporary or more long-term financial gaps. If you own jewelry, borrowing against its value can be one of the fastest options for obtaining needed funds. Unlike most loan types, borrowing against jewelry typically does not affect credit ratings. Services exist which offer to advance loans against jewelry.

Instructions

1. Decide which piece or pieces of jewelry you are willing to use for your new loan. Consider the monetary value of the jewelry, its sentimental value and any existing agreements regarding future ownership.

2. Determine the jewelry's value. Remember that the amount paid out to you will only be a small percentage of the value and plan accordingly. If needed, take the jewelry to a professional appraiser. Some appraisal services are free, but if the item is especially high value consider using a paid service if it has the best reputation in your area.

3. Shop for the best loan on your jewelry. If you have more than one pawnshop available to you in your area, consider visiting several to find the shop that makes you feel most comfortable and that offers you the best loan terms. As with most loans, extra costs include interest and assorted fees. According to Bankrate.com, interest rates vary and may be less than 5 percent or over 20 percent.

4. Choose a pawnshop and complete the required paperwork. Keep a copy of any paperwork or claim check in a safe place.

5. Redeem your jewelry within the time specified by your loan agreement. Most agreements are between one and two months. If you may be late redeeming your jewelry but will have the money on a specific date, call the pawnshop to discuss the situation.

Tips & Warnings

• A few online companies offer services similar to local pawnshops. Always be cautious when dealing with businesses online if you do not have a way to verify their legitimacy or reputation.

• Think carefully before using jewelry of high sentimental value for a loan. There is always the risk that the money you were counting on to pay back the loan will not arrive in time to redeem your jewelry.

• If your credit score is a concern, verify that defaulting on the loan will not affect your credit rating before agreeing to the loan.

References

• Bankrate.com: Pawn shops: New Look for Ancient Money Lenders; Jay Macdonald
• "Bloomberg Businessweek"; How Bad is it? Pawn Shops, Payday Lenders are Hot; Bernard Condon; July 2011
• "Time"; Pawnshops Thrive, Draw Scrutiny over Interest Rates; Janet Morrissey; January 2010