Do you find yourself in need of quick cash but hesitant to approach traditional loan providers or friends and family for financial help? Then, a pawn shop is the answer you've been looking for. Although pawn shops were once associated with financial desperation, they have now become a legitimate and common means of obtaining a loan in Singapore.
With little knowledge and research, you can leverage the benefits of pawn shops to your advantage. Let's find out more about pawn shops, how they work, their advantages, and how pawn shop interest rates on loans are calculated in detail below.
How do pawn shops work in Singapore?
Pawn shops in Singapore are not just places where you can sell unwanted items; they're where you can go to get instant financial help. They operate on a simple premise - you take an item of value as collateral to the pawn shop, and the pawnbroker lends you a sum of money for it. Well, the good news is that you can get the item back once you pay the loan and the interest associated with it. What's more, if you are unable to repay the loan, the pawn shop will sell the item to recover the money lent. From designer watches to musical instruments, pawn shops in Singapore accept a wide range of items as collateral, making them a convenient and versatile option for those in need of financial assistance.
Why should you consider getting a loan at a pawn shop?
No credit checks: One of the biggest advantages of getting a loan from a pawn shop in Singapore is that they do not ask for your credit score or perform a credit check. This means that even if you have had bad credit in the past, it won’t stop you from getting a loan at these shops.
Quick and easy: Unlike at other financial institutions like banks, where you have to fill out multiple forms and wait for weeks before collecting the personal loans, pawn shops are great alternatives to raise cash quickly.
No impact on credit score: Pawn shops, unlike banks or other traditional loan providers, do not check your credit score; getting a loan from them will not affect your credit score, even if you are unable to repay the loan. So don't worry about having a bad credit rating, you can easily get instant cash at a pawn shop.
Flexible repayment options: Pawn shops offer flexible repayment options with fewer restrictions, allowing you to pay back the loan at a pace based on your financial situation. You can also choose to renew the loan by paying the interest and extending the loan term.
Safe and secure: You don’t have to worry about getting scammed as there are licensed pawn shops in Singapore, which ensure that all transactions are safe and secure. Always make sure you only borrow money from these licensed shops in Singapore.
Won't lose possession of the product: If the product you’re pledging is of value to you, then you don’t lose it when you borrow money at a pawn shop. Once you repay the loan, with interest, the product will be all yours.
Easy way to sell: If you want to sell a valuable item and don’t want it back, then a pawn shop is a great option as you don't have to worry about posting your item on online platforms like Carousell or Facebook. You can simply take it to one of the pawn shops in Singapore and get the money easily.
How interest rates are calculated at pawn shops in Singapore
In Singapore, pawn shops charge up to 1.5% interest per month on loans. For instance, if you borrow $1,000 from a pawn shop, the maximum amount of interest you can be charged per month is $15. This interest rate may vary depending on the loan amount, the value of the item used as collateral, and the loan duration.
Let's say you want to borrow $500 from a pawn shop in Singapore and you pledge a diamond ring as collateral. The pawn shop offers you a loan term of 3 months and charges an interest rate of 1.5% per month.
The total interest you would be charged over the 3-month loan term would be:
($500 x 1.5% x 3 months) = $22.50
This means that if you repay the loan in full at the end of 3 months, the total repayment amount would be:
$500 + $22.50 = $522.50.
(Please note: This is for example only and the actual interest rate may vary depending on the pawn shop and the loan terms. It's always a good idea to shop around and compare loan terms and interest rates from different pawn shops before making a decision.)
Should you get money at a pawn shop?
Should you or shouldn't you borrow money at a pawn shop - we understand that it's a tricky decision to make. So we've put together a list of pros and cons of borrowing money at a pawn shop. Weigh your situation and make a decision to get out of your financial situation.
No credit check required
Higher interest rates than traditional loan providers
Quick and easy access to cash
Risk of losing the collateral if the loan is not repaid
Flexible repayment options
Limited loan amounts compared to traditional loan providers
Safe and secure transactions
Limited items accepted as collateral
Sell unwanted items for cash quickly
Negative stigma associated with using pawn shops
No impact on credit score
May not receive full value for the item sold to pawn shop
Overview of Pawn Shops in Singapore
Overall, pawn shops in Singapore can be a great resource for anyone who needs cash quickly or wants to sell their unwanted items. They offer a simple and straightforward approach that can help you get the money you need without going through all the hassle of traditional loans or online marketplaces. So if you're in a pinch, consider stopping by your local pawn shop in Singapore.
Where else can I borrow money in Singapore? Lendela can help
For some reason, if you don't want to borrow money by pledging a valuable asset, you can consider other alternatives such as taking out a personal loan with Lendela. If you are just looking for ways to save money to improve your financial health, then you can also consider debt consolidation.
Instead of researching 20+ banks’ websites and comparing their loan rates one by one, Lendela lets you fetch and compare pre-approved personal loan offers from multiple banks and licensed financial institutions at once with a few clicks of a button. Compare loan terms such as loan amount, EIR, tenure, and fees from different loan providers and enjoy shorter application and approval time. See all your cash loan offers at a glance with Lendela today.
- Pawn shops in Singapore can offer financial help to people who need to make quick cash, by accepting items of value as collateral and lend out a sum of money for these items.
- Whilst borrowing from pawn shops in Singapore can have some advantages, there are several downsides to consider, including higher interest rates compared to traditional loan providers.
- If you want to borrow larger amounts of money or you don’t want to risk losing collateral when the loan is not repaid, then Lendela can help you make the better choice by taking out a personal loan.