Pawn Shop Loan Interest Rates & Loan Alternatives In Singapore

1. How Do Pawn Shops Work, Pawn Shop Loan Interest Rates & Loan Alternatives In Singapore Pawnshops are reliable and legal alternatives to loans when you need money quickly. If you have a poor credit score or you want to avoid the paperwork involved with personal loans, you can consider pawning one of your assets. But did you know that pawnshops are good for investment opportunities, such as purchasing gold and silver? We’ll tell you all about pawn shops, their interest rates, and how to avoid losing money. Read on! How Pawn Shops Work In Singapore In Singapore as in other countries, you’ll give a pawnbroker a valuable asset in return for a cash loan. The contract you sign requires you to pay back the loan and the set interest rate within six months. When you’ve repaid your loan, you can get your pledge back. If you can’t make the repayments, the pawnbroker has the right to resell your items. Your items can be a gold necklace or a silver bracelet, as long as it is valuable.

2. The six months deadline extends with each instalment you pay. However, the interest rate grows accordingly so that repaying your loan becomes very costly once you go over the initial six months period. As such, many people prefer surrendering their pledges if they can’t pay on time. Remember that the pawnshop loan represents 60-80% of the value of your pledge. If you need more money, pawning your assets will not be sufficient. Besides, the increasing rate raises the value of the loan to up to 300% by the end of 24 months. That’s why you should consider carefully what you’re pawning and if you can make timely repayments. Pawn Shops In The Past Vs. Pawn Shops Now Pawnshops date back to three millennia, having been recorder in all major ancient empires. In the old days, pawnshops were mostly used by poor peasants, which is why they were dubbed the “poor man’s bankers”. Singaporean pawnshops emerged five years after the country’s foundation in 1819. Singapore took great care to regulate these institutions to protect its poor. Pawnshops faced some hardships caused by the 1929 Great Depression and the World Wars, but they became lucrative again once peace was established. Nowadays, Singapore has about 280 registered pawnshops. These pawn shops are now free from the “poor man’s banker” stereotype thanks to popular shows like Pawn Stars and Hardcore Pawn. Now, pawnshops have a good reputation thanks to their investment opportunities so that they have many white- collar clients. That’s why today’s pawnshops display jewellery, gold, and branded products in ample rooms for everyone to see. In the old days, pawnshops looked more like fortresses with metal bars that separated the staff from the customers, who were not to be trusted. You would have likely seen popular pawnshops such as Maxi- Cash along MRT stations or in shopping malls. They are flashy and often have promotional events, distributing flyers and balloons to passers-by. So, if you want to look at some good investment opportunities, check out a pawn shop now. Before you do that, though, let’s see what you can pledge. Pawnshops accept valuable items as collaterals. The word “valuable” doesn’t necessarily mean “expensive.” Sure, you can get a lot of money if you pledge a gold bracelet, but you can also get a reliable sum if you’re pledging power tools or a useful electronic device.

3. Remember that the pawnbrokers are more likely to accept pledges with a high potential of being resold. That’s why you can pawn expensive jewellery, branded items like Prada bags, luxury timepieces, or collectables. You can also pledge laptops, phones, or tables, sports equipment or power tools. It is all about the resale value. What Interest Rates Do Pawn Shops Have? We already warned you that pawnshop rates aren’t the most convenient if you can’t repay your loan quickly. From that point of view personal loans at banks or licensed moneylenders are more advantageous. Pawnshops in Singapore have a 1% interest rate during the first month. The rate increases subsequently by multiplying the number of months that have passed with 1.5%. As such, your interest is 1.5% in the second month, 3% in the third month, and 4.5% in the fourth month. After 12 months, your interest rate is 18% of the remaining loan amount. So, if you compare pawnshops to other institutions remember that: •Banks have a 1% monthly interest rate. •Credit cards have 2%-3% monthly interest. •Moneylenders have 1%-4% monthly interest rate for unsecured loans. All these rates remain steady, plus you can borrow bigger sums. If you do not have valuable items or branded goods for pawn shops but need money urgently, you can consider getting a quick loan from licensed moneylenders in Singapore or apply for a loan from banks. While banks may have lower interest rates, it is harder to get their loan approval and there’s a lot of paperwork and waiting time. Licensed moneylenders such as BST Credit will be able to approve and give you the money within an hour (should all documents be received), perfect for urgent needs.