{"id":49263,"date":"2021-08-23T15:59:53","date_gmt":"2021-08-23T07:59:53","guid":{"rendered":"https:\/\/www.imoney.my\/articles\/?p=49263"},"modified":"2021-08-26T10:33:39","modified_gmt":"2021-08-26T02:33:39","slug":"should-you-use-a-pawn-shop-if-you-need-money","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/should-you-use-a-pawn-shop-if-you-need-money","title":{"rendered":"Should You Use A Pawn Shop If You Need Money?"},"content":{"rendered":"

Pawn shops have a reputation for primarily catering to the poor. A place to go to where you no longer have any other alternatives and need to start selling off your possessions to make ends meet.<\/p>\n

On one hand, this is unfair to pawn shops because they serve an important role in providing financial services for those who may not qualify for loans. Historically, they also provided the only avenue for your grandparents to convert their gold jewelery into cash when needed.<\/p>\n

Alternatively, there is no denying that pawn shops end up catering to the less fortunate. After all, news sites reported long queues outside pawn shops<\/a> after restrictions of the first movement control order in 2020 were relaxed.<\/p>\n

<\/span>What does pawn mean?<\/span><\/h2>\n

The online Merriam-Webster dictionary defines the noun pawn as \u201csomething delivered to or deposited with another as security for a loan\u201d. In simpler terms, to pawn something is to deposit something as collateral for a cash loan.<\/p>\n

Going to a pawn shop is essentially similar to going to a bank to get a small loan – where the bank gets to keep your collateral until you pay them back. The amount you can receive is determined by the market value of your collateral, and that the pawn shop isn\u2019t going to take your credit history or income levels into consideration.<\/p>\n

This generally allows tiny micro-loans for those who may not qualify for a normal bank loan.<\/p>\n

<\/span>How does a pawn shop work?<\/span><\/h2>\n

Pawn shops are governed by the Pawnbrokers Act 1972<\/a>, which means that they are regulated by law and must be licensed to operate. This also means that you may run into unlicensed pawn shops that are operating illegally.<\/p>\n

When you visit a licensed pawnbroker with your item (called a pawn), you will first have the value of your pawn assessed. In the case of gold, this is pretty easy as the pawnbroker can quickly refer to the daily gold price to determine its value.<\/p>\n

Gold jewelry is not 100% pure gold. It is often a gold alloy to allow it to maintain its shape, which means that you will receive a lot less than the daily gold price for it.<\/div><\/div>\n

In the case of other items, the pawnbroker will appraise the item according to the current market value and take into account the condition of the item. For instance, there\u2019s not much value in pawning an old laptop because it may not be worth much on the second hand market.<\/p>\n

You should also note that note pawn shops may have limits on the types of items that they accept. While gold, jewelry, and watches are the most common, you will have to find out for yourself what the pawnbroker is willing to allow you to pawn.<\/p>\n

<\/span>Can you get your stuff back?<\/span><\/h2>\n

Yes, the pawnbroker will keep your pawned item in a safe storage space and give you a pawn ticket. This proves that you are the owner of the pawn, and gives you a fixed amount of time to return and buy it back with interest. By law, the minimum amount of time you are given to redeem your item is six months; however you are allowed to negotiate for a longer amount of time.<\/p>\n

If you manage to come up with the money within that time period, then you can easily just head back over to the same pawn shop and buy your stuff back (with interest).<\/p>\n

However, if you cannot afford to buy it back but do have some money left over, you can also opt to extend the pawn (for at most three months at a time). This is done by going back to the pawn shop and paying off the interest. If you don\u2019t come back for your item, then the pawn shop will put it up for sale and allow other customers to buy it.<\/p>\n

Pawn shops are not allowed legally to charge more than 2% per month in interest. If you are quoted a higher amount you may be dealing with an unlicensed pawnbroker.<\/div><\/div>\n

<\/span>Step-by-step guide to a pawnshop<\/span><\/h2>\n