If you have experienced needing cash urgently and you have nowhere else to go, then you have probably heard of pawnshops and what they do.
In today’s demanding economic climate in Singapore, there are a lot of individuals who need the help and the assistance that one may get from the financial system.
Whenever an individual requires cash urgently, he can turn to a lot of sources nowadays. They are the following:
- He can turn to a bank for a personal loan;
- He can turn to a financial institution for a loan:
- He can turn to a licensed money lender for payday loan
All of these processes take a lot of time and a lot of money. Some applications take time and several days for the loan application to be approved while others would even take weeks depending on the kind of financial experience that a person would need from the institution.
However, while all of these things are well and good, the truth of the matter is that people would sometimes need money right away.
With that, credit card companies came up with ways that people can easily draw cash from the ATM, and that is through the cash advance option of the ATM or credit card facilities. Unfortunately, this one is not always a good idea as the interest rate is often steep and ranges from 6% to 28% of interest.
Add that to the idea that sometimes, we all max out our credit cards to help us through the days.
This part is where the option of approaching a pawnshop for a loan comes into play. A pawnshop requires some form of security to offer, and that would range from bags to all other luxury items.
How does a loan from a pawnbroker work?
The process of using a pawnshop os simple. In Singapore, you should expect the following process:
- Take your expensive or luxury property. Say you have a gold ring, an expensive Birkin bag, or a Rolex watch, take this to the nearest pawnbroker or pawnbroker you know you can trust.
- Once you are there, the pawnbroker will ask you to fill out a form. The form is required because it has all of the details of the items that you are trying to pawn as well as some personal ideal about you.
- You then carry on to immediately carry out a valuation of the property. The process of valuation is simply the process where the appraiser would assess the value of the property, the authenticity, and also the fact that the property is yours. On this part, the appraiser will tell you a pawn value of around 60% and 80% of what it is currently worth.
- Before releasing the money to you, you need to carry your identity card with you. This part is just to make sure that you are who you say you are.
What Are The Terms Of The Loan?
Just like any loan, there are terms that come with the process.
- First, you will be given cash in exchange for placing your property on collateral. Take note that this means your cash is not free because you applied for a loan.
- You will be given a maximum rate is 1.5% per month. Pawnbrokers located in Singapore are not permitted to charge more than 1.5%, so there is nothing to worry about.
- The loan may last for a period of six months. If you can repay the loan and get the property as soon as you can, then that would not be such a bad idea.
What Should You Do With Your pawn ticket?
Your pawn ticket is your proof that you have has a loan. The pawnbroker will give you a pawn ticket which is the document that proves that you have pledged the item and that it is lying safely in the pawnshop.
The pawn ticket will include the following data, as required by regulation.
- Information to identify the borrower. You will be referred to as the “pawner.”
- The loan amount and the rate of interest.
- A description of the item that you have pledged.
- The valuation that the pawnshop has provided
- The date by which you need to redeem the item that you have pledged.
What if you lose the pawn ticket?
If you lose the pawn ticket and you are required to visit the pawnshop upon discovery of the lost and ask for a replacement. This step should be done because it is necessary to protect you and your property from being redeemed by someone else.
What if you can’t repay the loan?
There will be instances when you cannot repay the loan; this means that the property that you have placed in security will be forfeited and the pawnshop will sell it to recover the dues.
Fortunately, the foreclosure of your property will not happen instantly because you will still be informed of the process through a “notice of forfeiture.”
A notice of forfeiture is one that is sent by the pawnshop within a period of two months at the end of the redemption period. One month after you have received this notice, the item that you have pledged will be sold.
What if the sale proceeds are more than the amount that is due to the pawnbroker for the principal amount of the loan and the interest?
It will probably happen that the pawnbroker would sell the property at a high price or at least at the maximum price possible. It then becomes the duty of the pawnbroker to write to you with the details of the excess money. This amount can be claimed by you, and it belongs to you.
Does the pawnbroker get to keep the sale proceeds in case I do not claim it?
In the highly unlikely situation where you do not claim the proceeds, the pawnbroker will turn it over to the government. You can recover this sum to the government for a period that is within six years. At the end of this period, the money will belong to the government, and you can no longer claim it.
Of course, you would rather claim the proceeds of the sale.