Pawn Shops In Singapore, Interest Rates And Financing Alternatives Such As Personal Loans

When cash-strapped, individuals opt to visit pawn shops in Singapore to trade for some cash. This was seen especially during the global crisis of COVID-19, where borrowers formed a line outside pawn shops.

Pawn shops have existed in Singapore since more than 50 years ago. Since its operation, it has always been a reliable source of money during emergencies. Today, if you were to walk past MRT stations and shopping malls, there’ll be several pawn shops such as Maxi-Cash and ValueMax promoting their loan packages.

How does pawning work in Singapore? How do you deposit your valuable as a security and exchange for cash? Are there other ways to get money? What are the interest rates for pawn shops and are they better than licensed moneylenders?

Let us explain in this article.

How Pawn Shops Work In Singapore And How Much Can You Borrow 

It is essential to understand how pawn shops in Singapore operate.

When items such as a branded bag, watch, electronics, gold, diamonds are jewellery are pledged to a pawn shop, will lend you cash in exchange. Singaporeans usually pawn their YSL handbags, Rolex watches, Kate Spade wallets and jewellery.

The amount is usually between 60% and 80% of your pledge’s market value. This amount is determined by through the valuer’s expertise at the pawn shop. These loans are based on collateral because you pledge a valuable item in exchange for cash.

You are usually required to return the cash in 6 months. Many pawn shops retain your pledge for 6 months and auction it off when the debt is still unpaid after this period lapses. Each time a repayment gets made, the time gets extended by an additional 6 months with interest payable growing with every month. It would be advisable to let go of the pledge after one year.

Pawn Shop Interest Rates

If you bought your handbag at $5,000, note that you will not be getting the same amount from pawn shops.

When you pledge something valuable at a pawn shop, you will not get it back at the price that you initially bought it for because interest gets charged on the repayments. The interest rate is usually 1% at many pawn shops for the first month, which goes up to 1.55% for the following months. Taking a longer time to get back your pledge by paying back the loan means that you will end up paying more money.

Higher Interest Rates Than Personal Loans

To the surprise of many, pawn shop interest rates are higher than that of personal loans.

When you need money urgently, and you become familiar with the concept of pawn shops, the last thing you should do is mindless pledging and give out your precious items. Some items such as watches may even have sentimental value. Banks offer an effective interest rate of 1%, which is less than the 1.5% that you get offered at a pawn shop.

However, getting a personal loan might not be a feasible option when you have a bad credit score. Banks will look at your credit rating before approving your loan. If you require a personal loan, you can consider seeking help from licensed moneylenders as they are usually more flexible with loan approvals. The chances of getting a personal loan is higher.

It is advisable to pawn your items only when you have bad credit, and you are unsure about your future finances.

When Pawn Shops Might Be A Better Choice For You

If your financial situation is unstable, you are unsure about making repayments regularly, and you need to borrow cash, a pawn shop would be a better option than a money lending service. When you get a loan from a pawn shop, the item that you use to get the loan is the loss that gets incurred.

Alternatively, when you get a loan from a moneylender, it can be detrimental for you to miss several repayments. With the compounding interest and on the debt and several months of the amount piling up, you will be knee-deep in financial problems.

Accessibility Of Pawn Shops In Singapore

Many pawn shops are willing to give loans as long as you can pledge something valuable ad provide proof of identity. Unlike banks, there are fewer regulations and limitations. They also make their shops very eye-catching with glass cabinets displaying lots of jewellery and branded goods. Unlike licensed moneylenders in Singapore, they are allowed to promote by giving out flyers to passer-bys.

If you do not have a stable source of income or have bad credit, you may want to consider a pawn shop.

Auctions By Pawnbrokers 

Previously, if you pledged a valuable item like a gold watch for thousands of dollars and failed to make the required repayments, the gold watch will be auctioned off. If it sold for more than the initial sum, you were given the excess amount after deducting interest and fees.

It is assured that the pawnbrokers would not give low valuations and they would not take all the profits if they auctioned off something and got back more than the estimate you got. However, auctions no longer get seen as an effective way of disposing of pledges as the gains minimal when you spend money to plan for them.

Other than auctions, a pawnbroker can melt precious metals and create something else or resell the item.

Comparing Pawn Shops And Personal Loans

Although pawn shops might not be as complicated as you thought they would be, getting a personal loan from a financial institution is still more affordable. Many banks charge around 1% of active interest per month on your loan facility compared to the 1.5% that pawnbrokers charge. Additionally, there is no concern about losing valuables when dealing with a bank since personal loans are not secured, which means you do not have to put forward collateral to get a loan.

Licensed moneylenders in Singapore such as U Credit offer personal loans and other loan packages as well. U Credit is a legal financial institution that provides affordable loans to individuals who are cash-strapped. Other than providing a large range of loans, we are also more flexible with loan approvals. We even have our very own bad credit loan that is meant to help those in need.

However, if you do not have a stable source of income, pawn shops might be the better option for you. Getting a loan from pawn shops is still quite affordable, provided that you plan your pawn shop loan repayments properly.

Another Financing Option: Licensed Moneylenders In Singapore 

A licensed moneylender provides different loans according to your needs. They are often more lenient as compared to banks and have shorter approval periods. Although their interest rates will be higher than that of banks, they are especially helpful during financial emergencies. For licensed moneylenders such as U Credit, loan repayment plans can be negotiated and we are always willing to listen to your needs.

If you have a bad credit score, you can get a loan from U Credit to boost your rating. As you enjoy the benefits of flexible loan tenures, you will likely be able to repay on time and consistently. This will help to improve your bad credit score in the long run. Nonetheless, if you are unable to keep up with the loan repayments, your credit score will suffer as well.

For people who find it challenging to adhere to the payment plan, the moneylender may be willing to discuss your situation to provide flexible terms that ease your predicament. There are several moneylenders that you can choose, but it is always essential to ensure that you are working with a legitimate moneylender.

Personal loans by licensed moneylenders are unsecured loans. Unlike pawn shop loans, you will not need to submit a collateral.

Buying Gold And Silver Coins In Singapore

If you are interested in value growing items, consider buying gold or silver.

Singapore is the top country for purchasing and storing precious metals like gold and silver. With the combination of political stability, safety, no requirements for reporting and no taxes, this makes it a suitable option for buying gold and silver coins.

The Government continues to support and promote the bullion sector of the country’s economy through agencies like Enterprise Singapore that actively encourage refineries and dealers within Singapore to set up businesses as well as exempting precious metals from taxes.

You can purchase gold and silver coins online in a few quick and simple steps. The products are available for viewing, which enables you to select the category you are interested in with no restrictions placed on the quantities that you want to buy.

Gold Coins

Gold bullion coins are a worthwhile consideration for any bullion investor. Gold coins feature numerous advantages, including the following:

• They are ideal in situations where precious metals are useful as a means of payment or money.
• Small units of the gold carry a higher premium when there is a shortage of physical gold products.
• They are legal tender within the country of issue. The coins can be swapped or sold individually.
• There is a wide range of gold coins in various sizes from significant mints around the world. The close link that these mints have to their governments assures that the gold coins are authentic.

Silver Coins

Silver coins are a highly sought-after category within the product range of physical silver. Several investors opt to buy units of 500 coins that are a popular alternative to bars. They are also popular as gift options because they are more affordable when compared to gold.

Prices

The prices of gold and silver vary on international market prices, as well as price premiums, which refers to the difference that arises from the actual precious metal’s cost and the market price. The following is an overview of indicative prices that are subject to change due to various factors that affect the market.

Personal Loans From Licensed Moneylenders Offer A Lower Rate

While licensed moneylenders are often linked to loan sharks, we are most definitely different from illegal organisations. Licensed moneylenders are regulated by the Ministry of Law and we are law-abiding financial institutions. We are similar to a private bank.

Licensed moneylenders such as U Credit have the ability to offer personal loans at low interest rates and flexible terms to fit the needs of our customers.

Our highly-rated Google Reviews show how much our customers trust us. U Credit is reliable, trustworthy and efficient.

If you are in need of urgent cash, getting a loan from U Credit will definitely be more affordable than pawn shops in Singapore.