You could be in a tight spot financially. You require a meaningful cash amount for an emergency; however, the banks will not lend you some. In addition, the credit card debts along with the moneylenders are too costly.
In such circumstances, you will need to figure out a way to help you access the cash fast and all this without risking facing financial ruin. When you find yourself under emergency circumstances, you might have to consider paying a pawnshop a visit.
In Singapore, pawnshops are fairly common, and according to the Singapore Law Ministry, there are 226 accredited pawnbrokers in the country. These types of lenders, in reality, might not be that bad as a choice for you, provided that either doesn’t mind having to lose the valuable item. Or when you are able you could comfortably repay your money within a period of 6 months.
Below, are various features you need to be aware of when dealing with pawnbrokers. This will help you evaluate when this lender is the best choice for you.
Features Of Pawnshops
Quick Access To Fast Cash
In Singapore, pawnshops are an interesting option when compared to visiting the banking institution or the licensed moneylenders to get a personal loan. You do not need to have proof of identity as well as income when you need to get the loan issued by a pawnbroker. What you require to have is a valuable piece that you could present as collateral to your lender.
Once you’ve offered this, pawnbrokers may then provide you with some money rather easily since they are able to make some cash through selling the valuable even when you run off with the money. In addition to that, whereas banks may take some days in approving the personal loan, most pawnshops can pretty much offer you money upfront once you have brought in your pledge.
Exchanging Your Valuable Item For A Loan
In most occasions, Pawnshops are rather easy for you to work with. To start with you will need to take one or even more of the valuable items you own to a shop. The pawnbroker there will then appraise the products, and then give you the loan.
For instance, when you take a watch worth S$15,000 to the shop, the pawnbroker might end up valuing it at about S$10,000 and thus offer you a loan amount of S$10,000. Normally you could expect to be given 60 to 80% of the entire value of your pledge (which is your watch) for your payday loan from the pawnshop.
It is essential for you to keep in mind that you will be borrowing from the pawnshop, and not selling the item to them (although you might sell it to them when you choose to). Normally, you have 6 months to repay the cash back.
Every time you offer partial payments, the 6 months repayment period would be reset. It is only when you are not able to pay back the loan money that you will end up losing your valuable item forever. In such a case, the pawnshop broker might auction off the watch in order for them to get better their loan money.
Cost Of Pawnshops
Getting a loan from the nearest pawnshop in the country is in fact quite cheap. In recent times it looks as if there has been rapid growth in the numbers of pawnshops available in Singapore. This has led to a rather heated competition amongst them.
For them to be able to draw in more customers, these types of lenders have been reducing their rates thus giving a higher value to the customers’ possessions. They normally would only charge 1 to 1.5% a month, which is a lot lower when compared to the 2%, charged each month by credit card companies. At present, the biggest players in the country are Value Max, Maxi Cash, Money Max and Cash mart.
Other Noteworthy Features
In several occasions, when your items are sold during an auction for a lot more than the amount you owed the broker, it can so happen that you could even be given the surplus sum. For instance, given that you still have a loan from the pawnshop of S$11,000 that attracts interest as well as fees.
When the watch is finally auctioned off it sells for S$12,000, it is then possible for you to make the additional S$1,000. Although this is much better than you losing the watch completely, it is not advisable that you do this. And besides, you would have earned a lot more money if you had sold your watch on eBay by your self.
In so doing you would be avoiding all the fees and interest you would pay to a pawnshop broker. Besides that, you might probably end up selling the item for the much higher price, since most pawnbrokers will only be incentivized to only make a sale as fast as possible.
Personal Loans vs. Pawnshop
Even though pawnshops aren’t as bad as you may have expected, taking out a personal loan issued by the banking institutions is still a cheaper alternative. It so happens that most banks may charge you around 1% a month on the interest rate on the personal loan as opposed to. 1.5% which is charged by the pawnbrokers in Singapore. in addition, with banks, you do not have to be troubled about losing the valuable item since personal loans often come as unsecured loans. This means that you do not have to present any collateral for you to access some loan money.
However, when you do not have a credit rating or even annual income to get approved by your bank (or maybe for a new credit card), the pawnshop could be a better idea, and especially when compared to the more expensive alternatives such as the licensed moneylenders that might charge an interest of up to 4% a month.
Ensure that you are comfortable with letting go of your bag or jewellery, or even that you could certainly afford to pay the entire amount within 6 months for you to regain your item back. Otherwise, without any collateral, legal moneylenders are still your best bet when it comes to the quick and easy way to obtain cash to cross over your current financial difficulty.