Theserisksstem fromborrower'srisk, the propertydeveloper's risk, bankown risk, the risk initiated by the loanagreementand the risk initiated by the pawn.
In a pawn transaction, the customer gets a short-term loan of about fifty to seventy-five percent of the value of an item.
VOA: special.2011.04.18
Whereas traditional pawn shops can charge upwards of 20% per month for a loan, online pawn shops charge as little as 2%, which is lower than other forms of alternative financing such as receivables factoring.
Even borrowers who can get a conventional loan may still prefer the pawn route because it is relatively streamlined and private, with no loan committees or reporting to credit agencies.