Have you ever been in a situation where you need cash by tomorrow but don’t have enough in your bank account? You might be thinking what’s new about this? Almost everybody has encountered such a situation at some point in their life. Let’s rephrase this question for you. Have you been in a situation where you needed emergency cash but knew that you didn’t have enough time to even get a personal loan from a bank? May be at the same moment, you had recalled that you have a limited edition watch that was handed over to you by your grandfather or gold jewellery in your locker that you have never worn?
The best way to avert such a situation is to approach a licensed pawnbroker. When you’re asset-rich but cash-poor, you can redeem these assets for cash without having to run from pillar to post. Pawnbrokers offer a safe and convenient alternative to traditional banking.
Data released by the Ministry of Law, Singapore show that the number of pawnbrokers have increased from 175 in 2011 to 226 in 2015. Loan disbursed by them has also risen proportionately from S$4.95 billion in 2011 to S$5.51 billion in 2015. So, here’s what you should know before approaching one.
Want to Raise Cash Against Pawn? Here Are the 11 Things That You Should Be Aware of
Pawnbroking is, generally speaking, an uncomplicated process. Instead of waiting for credit checks, background checks, and validation of your forms and supporting documents, you can instantly claim cash against your pledged asset. The only thing that stands between you and your cash is an appraisal process, which is usually a lot less time consuming than traditional lending. Once you have deposited your pawn, rest easy knowing that your asset will be kept in a safe or strong room till redemption.
Under Singapore laws, your pawnbroking contract can be extended to a maximum of six months. If you fail to redeem within that period, you may be allowed to renew the contract at a fixed rate of interest. However, the creditor will have the right to auction it, sell it or repurpose it after the expiry of the contract. Just follow the steps below to realise value of your fixed assets:
- Fill out an online form and receive an estimate within a day or two. You may also have to provide details and upload photos of your pawn along with the form.
- Walk into a physical store with your pawn and a government-issued ID.
- The item will be visually and physically appraised in your presence by the staff at a store.
- Once the value has been determined and an agreement has been reached, the broker will give you a pawn ticket. You should know that the value of an item, as determined by a broker, may differ from its actual market value. That’s because, it depends on the valuation as evaluated by the store appraiser and your creditworthiness. It may also vary from broker to broker.
- Usually, you’ll be allowed to borrow between 60%-80% of the value of your item.
- Also, price fluctuations of items such as gold, may impact the valuation of your pledge. Hence, you’re advised to check the market value of precious metals such as gold, silver or gemstones before you pledge your memento.
- Items such as gaming consoles or laptops may not be accepted. The same is true for smartphones. The reason is that since models of these items get upgrades in quick intervals, the valuations also fluctuate wildly in short intervals. Hence, brokers may not always want to keep such items in possession for up to six months or beyond.
- Luxury watches, pens, and bags are in demand along with precious metals and gemstones.
- If you pledge an item again, the broker has the right to appraise the value of the item again. As such, this transaction will be considered independently from past transactions involving the same item.
- A pawnbroker has the right to say no to a repledged item even if the broker had initially accepted it.
- If you have bought a valid pawn ticket from the original owner, you alone will be responsible for the risks involved.
With time, the industry has managed to shed the negative perceptions. Today, even the young in Singapore often walk into a pawn shop without apprehension. Lower interest rate and fuss-free lending have been identified as the prime reasons for the recent popularity of this activity.
Why Keep a Memorabilia Only in Your Memory? Use It for Instant Cash
Like most Asians, Singaporeans have a fascination for gold items. Also, many wealthy residents own diamond pendants and watches, and other valuable keepsakes. Gemstones, ornaments, expensive pens, luxury shoes, designer bags, musical instruments, expensive electronic items, and valuable paintings may also be accepted as pledged assets at pawn shops. Instead of letting them sit idle in your bank locker or personal safe, you can use them to fund your lifestyle or your investments/business ventures. Not to mention your short-term capital needs such as emergency medical bills not covered by health insurance or a quick repair. The golden rule is that if the value of an item can be evaluated by the appraiser, based on its second-hand retail value, it will be accepted by your pawnbroker. This gives you and the broker more flexibility vis-a-vis traditional lenders who accept cars or houses (generally) as collaterals. The list of acceptable pledged items may vary from broker to broker. Contact the broker of your choice for more details.
Want to Redeem Your Pledged Asset? Here Is What You Should Know
Imagine that you have pledged your limited edition Hermes bag to a pawn shop. You have received cash against it and used it to pay down your outstanding Singtel phone bills. Great! You have averted the immediate crisis. However, you have forgotten to make allocations in your budget for redemption of your asset at the end of the loan tenure. You might not only have to pay higher interest charges but you may even lose your right for redemption, if you can’t redeem the item within a certain period, as provisioned by law.
Since the maximum tenure of a pawn loan in Singapore can’t extend beyond six months from the date of issue without renewal, you’re expected to make arrangements for repayment accordingly. Your pawn ticket will give you the details about interest charges, administrative fees, and conditions imposed by the lender. Since you have a set goal in front, won’t it be easier for you to apportion? If you think that your discretionary spending is going overboard, you’ll have to curtail it till you have redeemed your asset or paid down the interest to renew the loan. Don’t you think that taking back possession of your S$3,000 Hermes bag is more important than snacking on a S$4-S$5 burger everyday? Doing this can not only save you health but also wealth! Although seemingly insignificant, saving S$5 everyday for the next six months, can help you save enough to pay down your dues and redeem your pledged asset. During this period, try to be cautious with the way you utilise your credit lines and cards. Managing your overall debt better will help you repay your pawn loan on time.
What Else Should You Know?
- At the time of redemption, you’ll have to come with your pawn ticket and ID, pay the principal redemption amount and the accrued interest. Your asset will be released after the completion of the formalities.
- If you fail to redeem your asset within the due date or renew the loan, the broker will have the right to take possession of your item and you’ll become free from the loan liability. However, the broker will have to serve you a Notice of Forfeiture, a written letter, within 60 days from the redemption expiry date.
- You’ll have at least 30 days from the time you’re served the notice, to redeem your asset or renew the loan.
- Prior to the revision of the Pawnbroker’s Act in 2015, the only way to replace your lost pawn ticket was to collect a form of declaration from the pawnbroker, fill it up, and make a declaration before a magistrate or a notary public within a specified number of days. A replacement ticket was only issued after you had completed the process. However, under the current rules, no such declaration is required. If you lose your pawn ticket, you’ll have to simply contact your broker for a replacement. You may, however, have to pay an administrative fee, as determined by the broker.
Can You Be a Part of a Pawnbroker’s Auction in 2018?
A pawnbroker’s auction has traditionally been an important feature of pawnbroking in Singapore. However, since the effectiveness of this practice to protect the interests of the common public was questioned in various quarters, it now stands scrapped. Prior to the changes made to the Pawnbrokers’ Act 2015, a broker had the right to auction off an asset pledged by you in case you failed to redeem the item within the predetermined due date. The revised law has, however, has done away with this provision because the government was of the view that only a small percentage of customers was benefiting from this arrangement. It was noticed that jewellers and associated businesses were the most aggressive bidders at these auctions. The general public, who were the intended beneficiaries, were losing out due to their inability to match these outrageous bids. The last of these public auctions was organised on 24 October 2015. The pawnbrokers have also benefited from this change. They can save the cost of organising an auction and pass off the benefit to you, the customer. From the time this traditional practice has been abolished, a fall in interest rates have been noted. It has also been noted that pawnbrokers are considering a higher loan-to-valuation ratio in most cases.
How Can You Ascertain If a Pawnbroker is Approved or Not?
The importance of dealing with a licensed and regulated pawnbroker can’t be asserted enough. To ensure that you don’t fall prey to raptorial practices and loan sharks, you’re advised to deal only with licensed pawnbrokers. Moreover, without knowing with absolute certainty that your pledge - valuable to you for pecuniary and sentimental reasons, is safe throughout the loan tenure, can you ever be at peace with yourself? When you deal with pawnbrokers, regulated under the Pawnbrokers’ Act, the entire process is transparent and documented. The following is the list of approved pawnbrokers in Singapore:
- 916 Pawnshop Private Limited
- Ban Chuen Pawnshop Pte. Ltd.
- Ban Fook Pawnshop Pte. Ltd.
- Ban Hin Pawnshop Private Limited
- Cash Box Retail Pte. Ltd.
- Da Li Pawnshop Pte. Ltd.
- First Pawnshop Pte. Ltd.
- Hua Lian Pawnshop Pte. Ltd.
- Joo Tuck Pawnshop Pte. Ltd.
- Lianhe Pawnshop Pte. Ltd.
- Marsiling Pawnshop
- Maxi-Cash (West) Pte. Ltd.
- Nam Cheong Pawnshop (Pte). Ltd.
- Oxley Pawnshop Pte. Ltd.
- Sin Lian Pawnshop Pte. Ltd.
- SpeedCash Global Pte. Ltd.
- Tack Lee Pawnshop Pte. Ltd.
- Top Cash Pte. Ltd.
- Valuemax Pawnshop (SG) Pte. Ltd.
- Wan Onn Pawnshop Pte. Ltd.
- Xin Tai Long Pawnshop Pte. Ltd.
- Yong Teck Pawnshop Pte. Ltd.
- Zheng Gang Pawnshop Pte. Ltd.
Check the complete list, updated last on 1 July 2018, to know all your options.
What Are the Rates and Charges That You Need to Consider?
If you have pawned your favorite bag or diamond pendent, rest assured knowing that you can’t be charged an interest rate exceeding 1.5% per month. To make it even more competitive, some of the pawnbrokers also offer a discounted rate for a limited period. At the time of redemption, you’ll have to pay the accrued interest along with the loan principal. You may also have to pay a processing fee for the application and appraisal process. Check with your broker for the details. Additional fees may include administrative fees for replacement of pawn ticket among others.
Planning to Pawn? Here Is a List of Things That You Need to Consider Before You Do So
In order to choose the right pawn shop that offers the best loan-to-valuation ratio for your item and a hassle-free experience, here are the things that you should consider first:
- Is the broker operating under the Pawnbrokers’ Act? Is the business completely legitimate? Are they doing any of their dealings offbook?
- How good are the appraisers on their team? Are they fair? Can they evaluate the right value of the item that you’re pawning?
- How safe will your asset be with them? Do they have a proper security apparatus in place?
- Try to ascertain the guaranteed market value of your pledge individually and then see how much the pawn shop is offering. You may also consider shopping around before settling for one. This way, you’ll get the best value for your item and possibly a lower interest rate on your loan.
- Is the business insured? If something were to happen to your prized possession, while in their custody, can they compensate you fully for your loss?
- What are the fees and charges that you’re looking at? Are they competitive enough or should you shop around some more?
- How quickly can you get an estimate? How quickly will your loan be approved after the appraisal?
- How conveniently can you reach your broker? Is it worth the time and effort?
- What are the items that are accepted as pawn? Will they accept your item?
- Does your broker charge GST on interest payments?
- What is the process of forfeiture?
Finding answers to the questions listed above will help you determine whether your chosen broker is the best for you or not. You can also save more and get the best deal.
Should You Really Borrow Money From a Pawnbroker?
A loan from a pawnbroker isn’t cheap. You actually have to pay quite a lot of money to reclaim possession of something which you already own. Also, there is always the risk of losing the item forever, if you fail to redeem it. Despite these misgivings, there’s no denying that a pawn loan can be a viable option for short-term liquidity. A bank loan is a cumbersome process. Moneylenders charge exorbitant interest rates. Because you’re offering a collateral, a pawnbroker might offer a loan that’s reasonably priced and easy to repay. Here are some situations when you might find pawnbroking useful:
- When you need to pay for a minor car or house repair, which is not covered by insurance.
- When you need to pay off some utility bills.
- When you need to recharge an online video subscription plan.
- When you need to pay off certain fees such as school fees urgently and you’re sure that it’s just a one-off thing.
- When you have to buy your special friend a gift but don’t have enough cash.
For whatever purpose you use a pawn loan, just be careful. Always have a backup plan in place.
When You Should Steer Clear From Pawn Shops
Pawn shops are great options for short-term cash. You may have already experienced the convenience of this form of lending. But, before you plan to take another pawn loan, let’s ask you one thing. Are you taking the loan for the right purpose? Here are some situations when a pawn loan isn’t the best option:
- When you have a long-term debt problem. If you borrow more to pay down the existing outstanding debt on your cards or personal loans, you may not only fail to fully settle the loans but also risk losing your collateral.
- Don’t use it to pay for your child’s education.
- Pawn loans may prove to be insufficient if you need a large amount of money. Personal loans from banks remain your best bet in such scenarios.
- Don’t get a loan against a pawn that you can’t risk losing. Ever. Only opt for a pawn loan when you’re relatively certain that you can redeem it.
- It’s best not to pawn in order to make an investment since most investments are generally risky.
- Never pawn to provide for an exotic trip or to shop for an expensive laptop. Use these loans only when you have an emergency.
When a proposition sounds too good to be true, you need to have your guard up. Pawn loans fall in this category. Hence, despite the seemingly irresistible deals that they may offer, don’t jump right into it. Get yourself acquainted with the fine print of the deal before putting your signature on the dotted line.
How Closely Does the Government Monitor the Industry?
The Pawnbrokers’ Act has been used by the government to regulate the industry since 1994. However, it has made amendments to this act in 2015 to protect the interests of the pawners better. Under the new law, pawnbrokers’ auctions have been scrapped. The government believes that this will allow brokers to offer better valuation for your items since they can now avoid the expenses of organising an auction and pass the benefits to you (the customer). Also, under the new law, licensing policies have been made stringent. According to the new law, pawnbrokers will have to maintain a minimum paid-up capital of S$2 million for their first branch and S$1 million for every subsequent branch. The law also necessitates brokers to maintain a security deposit higher than S$20,000 as mandated by the 1994 edition, for each branch. The deposit has to be placed with the Accountant-General of Singapore. It has to be made in cash or any other form as the Registrar may allow. This law has also made it binding on a broker to conduct stricter checks on the background of pawners and report suspicious activities. Better mechanisms have also been put in place to ensure that your pledge is safe and you get it back in the same condition in which you had left it.
Do You Have Unclaimed Monies From Past Pawnbrokers’ Auctions? Here’s How You Can Recover It
You’re probably aware that the last pawnbrokers’ auction had been organised on 24 October 2015. The rule, before the amendment to the Pawnbrokers’ Act in 2015, was that if a pledge for which the loan amount exceeded S$50, exceeded the base price reserved for it at such an auction, the surplus, after the deduction of the loan principal, interest, and fees, can be claimed by the pawner. The auctioneer had to inform the pawner within 10 days from the date of sale by registered post. After that, however, it became the responsibility of the pawner to claim it.
However, if you couldn’t make a claim within 4 months from the time you were informed of the sale, it became the responsibility of the broker to deposit the surplus from the auction with the Accountant-General within 14 days from the expiration of the 4-month period available to you. Unclaimed monies from such auctions stay with the Accountant-General for 6 years after which they’re transferred to the Consolidated Fund. If you have such unclaimed surpluses from pledge auctions, you can make a claim, even if the money has been transferred to the Consolidated Fund. Here’s how you can make your claim:
- Visit the Registry of Pawnbrokers and click on the specific listing of unclaimed monies.
- Once you have located your unclaimed monies, make a note of the “Remarks” and “Year Paid” from the record.
- Get in touch with the Registry of Pawnbrokers with valid documents to make the claim.
- Some of the common documents that you may have to furnish are:
- Your pawn ticket.
- Your valid, government-issued ID.
- A police report or other documentary evidence that validates your claim, in the absence of a pawn ticket.
Why let go of something that rightfully belongs to you? With a little effort, that S$50 that had never reached you in the past, can come back to you. Use it to buy a new dress or better still, start a new savings plan.
How Did It All Start?
The Latin word for pawn is pignus. According to Merriam Webster, it is an arrangement where a creditor has the power to sell a pledged asset in case the borrower fails to settle the loan dues. Some say that it had started in ancient Rome, Greece, and China where lending money in return for collateral was an acceptable and common practice. But, when did it start in Singapore? Some say that after the foundations of modern Singapore had been laid by Sir Thomas Stamford Raffles in 1819, presence of pawnbrokers were noted. However, Sir Raffles was of the opinion that stringent laws had to be enacted to ensure that people, who entrusted their valued possessions to these brokers, weren’t taken for a ride.Today, the number of registered pawnbrokers run into hundreds and their activities are regulated by the Pawnbrokers Act.
How Organised Is the Industry in Singapore?
Due to proper regulation, this industry is today on solid footing. Many Singaporeans need urgent cash. Due to poor credit scores or paucity of time, they can’t always get in touch with traditional lenders. Borrowing from moneylenders has its own risks. A better alternative for many low-income Singaporeans? They use assets available with them to raise cash for their immediate needs. They usually have six months to settle the loan and take back possession of the asset from the broker. Today, the pawnbroking industry is a booming one. Maxi-Cash, MoneyMax, and ValueMax – the three biggest pawnbrokers in Singapore – have already gone public. Not only do these modern pawnbrokers have multiple plush brick-and-mortar locations from where they carry out business, they also have serious online presence. After the Global Financial Crisis of 2008, the business has witnessed an exponential jump. A Business Times (BT) report had pegged the value of the industry at S$7 billion at its peak in 2012. The report also said that the value has slightly depleted since then and stood at S$5.5 billion in 2016. While the lower-income still remains the target socioeconomic group, over the years the salaried class, have also taken a liking for this alternative funding model.
So, what does all this mean for you? You’ll enjoy transparency and safety. Due to intense competition in the industry, you can also expect great deals and special offers. It also means that there is no need to hold onto an heirloom simply for sentimental reasons. You can also make it work for you and raise cash, whenever required. Due to better regulation, you can also enjoy complete peace of mind. The same BT report revealed that an increase in competition and better monitoring means that you can get cash for up to 70%-80% of the assessed value of your pledge as against only 40%-50% that you could have expected a few decades ago. Whether you need money to repair your car which has met with a fender-bender or need some cash to pay off your outstanding utility bills, you can safely choose the convenience of pawnbroking over less convenient options.
How the Rise of Online Activities Are Helping the Industry Change Its Image and Expand Its Core Market
There was a time when pawnbrokers were known as the poor man’s bank. Not anymore. Market data shows that adoption of online business models has helped many of these pawnbrokers find a target market among the well-heeled in Singapore, too. If you’re wondering why, you won’t be surprised to learn that the answer lies within your reach. You have surely observed a rise in living expenses in the recent years. Data shows that average household debt has also increased during the period. Also, the rise in inflation isn’t reflected in your salary hikes. But, has it really impacted your discretionary spending or brought about a change in your lifestyle? You’ll most probably answer in the negative.
To ensure that you don’t run out of your Netflix subscription or lose your ability to wear those expensive Zara dresses, you’ll need to borrow. Now, if you already have multiple unsettled credit lines coupled with a mortgage, what is your next best option? Going online and checking for pawnbrokers. That’s because even if you’re running short of liquidity, you still have those expensive collector’s items in your closet. Also, nobody likes to be heckled by loan sharks, which is a distinctive feature of unregulated lending. Online marketing efforts in the recent past have given this industry more visibility and access to customers in different social strata. In the end, a pawn loan can be your personal Dobby. Treat it well and it will serve you faithfully. Be cruel and cavalier in your attitude towards it, and it might pull a few nasty tricks on you!
Have A Few More Queries? Here are Answers to Them
Q. Is there a minimum loan payment amount?
A. There is no minimum loan payment amount on a pawn loan. You’ll have to pay the principal and the accrued interest in accordance with the terms mentioned on your pawn ticket.
Q. Can my minor son pawn items?
A. No. As per the Pawnbrokers’ Act, only a person aged 18 or above can apply for a pawn loan.
Q. Can I send my husband to renew or redeem my pawn loan?
A. Ideally, you should visit your pawnbroker with your pawn ticket and ID to redeem or renew your loan. However, if you have a genuine reason for which you can’t be physically present, you can authorise a person of your choice to renew/redeem your loan. The person should present the pawn ticket, a letter of authorisation from you, and their ID.
Q. Why is the broker not accepting my expensive smartphone as pledge?
A. The broker, is within their right, to decide what to accept or reject. You can contact your broker to know which items are accepted. There is also no guarantee that you’ll get a valuation for your item, equal to what the market is willing to offer. Many brokers don’t accept smartphones because they tend to lose value quickly.
Q. I want to pawn an expensive pair of diamond earrings. How will a pawnbroker appraise my pledge?
A. Most pawnbrokers have experienced appraisers on their payroll. They’ll first determine the genuineness of your pledged asset. Then, they’ll check the rarity, cut, weight, and condition of your jewel. If your asset has an antique value or high sentimental value, that may also be accounted for. The actual process of appraisal may vary from broker to broker.