Things to Know about Pawn Shops in Singapore

When you give a pawn shop a precious item (commonly diamonds, gold, electronics, jewelry, or branded bags), the pawn shop will loan you money in exchange. The sum is between 60% and 80% of the market value of your promise, as determined by the pawn shop's experienced appraiser. Collateral-based loans are the name for these types of loans.

Maxi Cash, Money Max, Value Max, and Cash Mart are the prominent local pawn shops in Singapore. You have around six months to repay the funds. If you don't pay your loan, most pawn shops will retain your commitment for 6 months before attempting to sell it off. They will lengthen the duration each time you make a deposit by another 6 months. With every passing month, the amount of interest rate increases. You'd be well off abandoning the promise once a year has passed. Here's what you need to understand about pawn shops:

o   Let's pretend you're not in good financial shape. You're not sure you'll be able to make regular payments, but you still require a loan. In that situation, a pawn store is a better option than a moneylender. When you borrow money from a pawn shop, your commitment (the thing you're pledging to receive the loan) is the most you may lose. The rate of interest on a loan accumulates over time, and after a few months or years, the amount owed piles up. 

o   When you hock anything at a pawn shop, you can't get it back for the same price. The installments are subject to interest. The interest rate on loans in most pawn shops is 1% for the first month and 1.5 percent for following months. As a result, the longer you wait to retrieve your commitment, hence more money you'll owe. Take comfort, though: the interest rate charged by a pawn shop is less than that charged by the typical credit card (which is about 2 percent per month).

o   If you're in desperate need of cash and you've just learned about pawning, don't go into a selling frenzy and hand over your priceless family treasures. It's worth noting that banks are now giving personal loans at 1% practical interest rates, compared to 1.5 percent at pawn shops. If private loans are not a possibility owing to a poor credit history, pawn shops may be a better alternative than moneylenders, who charge outrageous interest rates of over 4% per month. So the secret is to only pawn goods if your credit is weak and your financial position is unpredictable in the coming years.

o   A pawn shop is not a substitute for Tmall or eBay. When they take a pledge, they typically provide loans of 60 percent to 80 percent of the pledge's true worth. The object is usually something precious, such as a jade bracelet or a Rolex. To use a pawn shop to sell your belongings is generally not a good idea. If you sell to a wristwatch merchant or a jeweler, you will nearly always seem to get cheaper.

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