Reality television shows such as "Hardcore Pawn" and "Pawn Stars" have thrust pawnshops in the limelight recently, making them seem more accessible to quick-cash seekers who previously might have shunned them. Nonetheless, "pawnshops are usually only a good idea for people who buy merchandise there," says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling.
Pawnshops operate by loaning money for a piece of merchandise, typically at a fraction of the item's value. Borrowers have 30 to 90 days to pay back the loan, along with high fees and interest, or risk forfeiting the item. "If you can't pay back the loan, you'll have sold your merchandise for cents on the dollar," says Cunningham. You can also sell your goods outright to pawnshops, but you may get more money if you sell at a yard sale or on the Internet.
If you must: Interest rates at pawnshops can range from 5 percent to 20 percent, depending on the store and applicable state laws. Shop for the lowest rate and best price you can get for your merchandise. "Use the money to put out the fire," says Cunningham, "then figure out what led to the situation, and try to develop a plan so that it never happens again."