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Pawning has been the oldest option when it comes to getting quick cash. When you pawn a valuable item, you entrust its security to the pawn broker with a legal contract expressing that you must redeem your pledge by paying the loan plus the interest agreed on within a specific period of time.
- The word ‘pawn’ comes from the Latin word pignus which means to pledge, now it is known as collateral.
- Pawnshops give six months for their clients to redeem their collateral; they also use this to give the police some time to check some suspicious items.
- In the United States, less than .02% of pawn shop transactions involve stolen items.
- In Singapore, more than 3% of pawners were unable redeem their pledge from June 2015 till April 2016.
- It was illegal for due to loan with interest based on Mosaic Law.
- The famous History Channel’s Pawn Stars undeniably made pawn shops more interesting than it used to. The most expensive item thy have is a cigar box that belonged to John F. Kennedy fetching at US $125,000.
- The pawn brokers’ patron saint is Saint Nicholas.
- The three golden balls hanging outside the pawnshop as a symbol possible commemorates the story of Saint Nicholas dropping 3 bags of gold to a poor man’s house so save his daughters from becoming prostitutes
When a person has barely enough money to pay the bills and emergency expenses to clear, the common solution is to take out the family heirloom and go to the nearest pawnshop to get a loan. It has been known to be the easiest solution since the 19th century when the first pawn shop was put up in operation.
Lending money with collateral originated around 3,000 years ago and thrived in Ancient China, Rome and Greece. Peasants used to take their clothes, the most expensive item they have, to get a loan. Since then people seen pawning in these establishments are considered poor, thus pawn shops are known as “poor man’s bankers”. However, times have change, pawn shops are now commonly used by businessmen, white-collar workers, and gamblers from all walk of society.
Singapore was founded in 1819, and after four years of starting as a booming settlement, Sir Thomas Stamford Raffles shared his views on pawn shops that started to exist in the island. He said that pawn brokers have to be regulated under strict rules, as there is a risk that the poor’s need may be taken advantage of.
It was in 1824 when the existence of pawn shops has been first recorded. They are required to tax $480 to the British colonial administration since Singapore was then a British settlement.
It is now common for a pawnshop to be owned by a Chinese. In 1872, Sheng He Dang opened the first Chinese owned pawn shop. By 1886, there were 26 pawnshops giving loans to poor locals. Since the business was steadily booming, there was a need to regulate the industry, thus the Pawnbrokers Ordinance was then passed in 1898.
It was in the period of 1620 to 1929, when 25 pawnshops rise in the industry. The 22 pawnshops were owned by the Hakkas, the last surviving remnants of Northern Han Chinese. According to the records, these pawnshops could generate a monthly turnover of $2million a month. Yet, the industry received its first serious blow in 1929 during the Great Depression. The brokers begun to pick up the pieces and started gearing again in 1935. Unfortunately the second serious hit went down on them during World War II.
After the war, it was time to restart the business. Fifty pawnshops were thriving by 1978, then in two decades 19 more entered the industry. As for the regulations, The Pawnbrokers Act has been revised from time to time to further increase the quality of services to the Singaporeans. Currently, there are 277 registered pawn shops in Singapore, located at the convenient places for everyone in need of quick cash.
Pawnshops, as many know, thrives with secured loans, yet unlike the banks which uses homes and cars as collaterals, pawnshops accept signature bags, luxury wristwatches and pens, jewelry and gold/silver as pledges. The broker may have other business such as a jewelry store, but the main focus is pawn broking.
When you enter the shop to pawn your valuable item, the appraiser will authenticate your pledge, whether it is real gold/silver for jewelry, or if it is genuine or imitation for luxury watches and bags. Expect your jewelry to be weighed, scrutinized under a magnifying glass, and closely examined. The appraiser will then decide the value of your pledge based on its second-hand retail price.
The price will also be based on various factors. The broker will consider the economic trend when it comes to appraising jewelries, especially now that the gold price is fluctuating, the broker will try to predict its future value. When it comes to bags and watches, the edition or limitedness of design will have to be considered. Remember that the aim of the broker is to see that they can benefit from the pledge should you fail to redeem.
Though being an old business, the brokers also use the web for appraising your pledge. They surf through buy and sell websites such as eBay and Amazon to know the current prices opened to the public. When it comes to gems and jewelries, they will consider the weight, cuts, rarity, and the metal works. Brokers usually hire staff with expertise on such valuables.
Though it is not yet proven, some think that the sentimental value you have with your pledge also affects its value. The more emotionally attached you are with the collateral, the higher the value it goes because you will be more determined to redeem it.
After the price has been set by the appraiser, you can only borrow around 60-80% of its second-hand value. Then you have to provide a personal identification card to prove your identity and current age. It is prohibited for minors age 16 and below to pawn any valuable. If your collateral exceeds worth of $200, you have to prove your ownership with legal documents such as purchase receipts. If you can’t prove that you actually own the item, the broker might suspect that you have stolen it or acquired it through illegal activity. Should this happen, they are given the right to detain you are seize the suspicious item until the police comes for further investigation.
Pawning seemed easy; it only requires a pledge and an id. Apart from it, the interest rate may appear low, yet the pawnshops are allowed to raise the interest rate by 1.5% every month until you actually redeemed the collateral. Loans through pawning usually takes a period of six months, after six months, the ownership are legally transferred to the brokers. It is in the discretion of the brokers on how they will dispose the unclaimed valuable items.
(Amount of pawn loan) x (Number of months for the loan) x 1.50% = (Interest charge)
If you miss three months: 1.50% interest rates multiplied by 3 months = 4.50%
After successfully pawning you valuable item, make sure that you keep the pawn ticket, as it is a hassle when you lose it. You have to get down to your pawn broker and ask for a form of declaration, fill it out and make a declaration before a magistrate or a Notary of Public. Complete the process within 3 days. Imagine the hassle and extra expenses you could have saved if only you kept the pawn ticket in a safe place.
Since 1st April 2015, auctions for unredeemed items are no longer held in Singapore as per revised Pawnbrokers Act. Since the forfeited items are now owned by the brokers, they can decide on what to do with the pledges. So if your item has a deep sentimental value for you, make sure that you will be able to reclaim it. Not all pawners are successful when paying off their collaterals; around 3% of Singaporeans were not able to settle their loans and lost their pledges.
After paying off the loan, you can get back your precious item, if you cannot settle in six months; you lose the item, yet your responsibility of paying the loan also ends with it.
Pawning sounds easy, but you also have to know the fact that there is a possibility that a broker will reject your item. And what if you do not have an asset that can be used as collateral?
Pawning is to risk losing your beloved valuable in a very limited time period. However, you can choose to get a personal loan from licensed moneylenders such as Cash Mart. Personal loans have flexible terms and payment schemes that can fit your unique needs.
It is no secret that the most pawned item and the prime acceptable item is the jewelry, especially gold. On Wednesday 15th June 2016, the gold price in Singapore calculated in Singapore Dollar (SGD) closed at $23.35 per gram of 10karats. A gram of 24 karat was $56.04.
The value of gold in the world market that directly affects its value in the industry of Singapore often changes. It has its ups and low. The pawn brokers watches the trend close to be able to predict its value in the future.
Gold karat table
Average gold price per ounce, kilogram and gram
Latest gold price in Singapore
The auction of unredeemed pledges has been part of over a half a century of pawn broking tradition. Unknown to many, the auctions are actually open to public. Anybody can bid on the pledges, yet jewelry resellers are more aggressive in bidding that they scare away the public bidders. And pawn brokers admit that they don’t gain much with auctions as they have to shed money to organize it.
The Pawnbrokers Act has been revised in 2015 removing the auction system. The Registry of Pawnbrokers believes that the removal of auction will let the brokers give better appraisal to pledges. The Pawn brokers also welcome the change as they do not have to incur auction expenses and their administrative work has been dramatically reduced.
Instead of disposing the pledges through auctions, the pawn brokers can either resell the item in their branched jewelry store, or melt the gold or silver and recreate it into something new.
Registry of Pawnbrokers
The Ministry of Law requires the pawn brokers to acquire a license before operating their business. The Registry of Pawnbrokers implements the Pawnbrokers Act and regulates all licensed pawnbrokers in Singapore. The Pawnbrokers Act is constantly revised to enhance the pawning industry.
Make sure you are only transacting with a licensed pawnshop. Check the latest list of valid registered pawnshops at the www.mlaw.gov.sg.
Pawnshops have been a go-to place whenever individuals need immediate extra cash. It is quick and hassle free to get a loan, as they only require an acceptable valuable item and an ID. If you fail to repay your loan, you lose your collateral and then your loan is defaulted. After six months, whether you are successful or not, you are no longer liable on paying the loan.
On the other hand, the low monthly interest of 1.5%, multiplies every month by 1.5%. The longer it takes to pay off the loan, the higher amount you have to settle. The loan you can get is very limited. You can’t get cash higher than the 80% of the value of your pledge.
Ultimately, you cannot get a loan without a valuable item at hand that you can prove belongs to you. Do not be tempted to pawn what is not yours, you might end up in jail with a more shameful reputation.
Licensed Money Lenders
Licensed money lenders offer various loans that can fit your need. There is no need to worry if you have a bad credit ration since Cash Mart offers loans despite a not so healthy credit score. If you get loans from a licensed moneylender, you can improve your credit score by repaying diligently and on time. If you fail to pay as agreed with the lender, you credit score will go down the drain. Do not worry if you might not be able to meet the payment scheme, the Cash Mart staff will be willing to listen to your predicament to make flexible terms only for your dilemma.
Will so many moneylenders floating around the web, make sure you only get loans from a licensed moneylender. There is no need to leave a collateral you cannot afford to lose, you just need a minimal paperwork at Cash Mart. The process is fast, and you can get your cash disbursement after 30 minutes.
Even Singaporeans with regular pay checks could meet a bump on the round when it comes to budgeting. It is already hard paying loans while also trying to get by with daily expenses, it is worse when you have to part with a precious heirloom just to get by one financial patch. What if you lose all your jewelries, watches and luxury bags just because you failed to pay the increasing amount of you loans from a pawn broker?
At Cash Mart, there is no need to break your heart. You can keep your treasured items and Cash Mart will give you more options to get by. The staff will even give you priceless advice on how you can get back up financially and stay there.
With Cash Mart there is nothing to lose. They offer low interest personal loans with flexible payments schemes to those with bad credit score. What’s more? You can leave the Cash Mart office 30 minutes after coming in: worry free and cash in hand.