What pawnbrokers are, and when to use them to get cash

Wondering if you should use a pawnbroker? Here’s what you need to know.

If you’re a child of the 80s, you probably remember the neighbourhood pawnshop as a place to avoid.

Pawnbrokers of the day used to operate from behind metal bars clearly visible from the outside, flanked by giant pillars with Chinese lettering that secret societies would approve.

Since good boys and girls don’t end up in prison, it follows that they should stay far away from any place that has bars. 

Plus, whenever a character in a serial drama visited a pawnshop, it was always for vile reasons linked to gangsters, gamblers, or a combination of the two. No wonder we grew up with such maligned notions! 

• What are pawnbrokers?
• How do pawnbrokers work?
• Top pawnbrokers in Singapore
• Pawnbroker fees
• Pawnbrokers vs Personal loan

What are pawnbrokers?

Pawnbrokers in Singapore have undergone a makeover, successfully shedding their (underserved) shady reputations, and reinvented themselves into perfectly respectable service providers.

The modern-day pawnshop still carries on its original work, allowing individuals a safe and convenient way to exchange their valuables for cash – from refreshed facades that are much more palatable. 

Instead of imposing entryways and dank interiors, pawnshops today feature fluorescent signboards and bright, cheery interiors. Pawnbroker chains have also established themselves throughout Singapore, looking right at home next to jewelry shops and shopping malls. 

Popular chains have even taken to the Internet, with active social media pages and professionally built websites featuring online stores! 

How do pawnbrokers work?

Pawnbrokers take in valuable items in exchange for cash, creating a collateral-based loan. Interest is charged on the loan amount monthly, and the loan comes with an expiry date, typically 6 months.  

You may choose to repay the cash amount plus interest to redeem your item. If you need more time to repay the loan, you may extend the loan tenure by paying the interest incurred. 

Alternatively, you may also choose to let the loan expire. If this passes, your loan is discharged and your item becomes the pawnbroker’s absolute property (i.e., you are no longer the legal owner of the item).

Since 2015, pawnbrokers in Singapore no longer hold public auctions for unredeemed items. Under the auction system, items sold at a higher value than the loan would generate a surplus, which would be returned to the original owner of the item. 

With the removal of this system, pawnbrokers instead compete on providing high valuations to their customers. 

Popular pawnbrokers in Singapore and their locations

In the following table, we have listed some of the more popular pawnbroker chains in Singapore; they’re quite ubiquitous really, especially in the HDB heartlands.

This isn’t an exhaustive list though. You can look up a full list of licensed pawnbrokers in Singapore online.

Cashbox

Cashbox operates five outlets, scattered all around Singapore in the outer districts. Besides pawnbroking, they also focus on retail sales of watches, bags and other luxury items. 

The chain, established in 2008, is a subsidiary of Woodlands Transport Service Pte Ltd, one of Singapore’s largest private transportation corporations. So although the brand is relatively small, its financial backing should be relatively solid. 

Cash converters

Hailing from Australia, Cash Converters is the world’s largest dealer of second-hand goods. Unlike other pawnshops which tend to focus on valuables, Cash Converters deal in a larger catalogue, including electronics, household furniture, clothing and other everyday items. 

If you’re looking to make some money out of the unwanted stuff in your storeroom, Cash Converters may be able to help. Just don’t expect fantastic prices; think of it more as a tip for bringing your items in. 

Maxi-Cash

Singapore’s largest pawnbroking chain with 46 stores all over the island, Maxi-Cash looks more like a jewellery store – complete with attractive-looking staff and dazzling facades – than a traditional pawnbroker. 

Its modern-day aesthetics is a nod to its status as Singapore’s first publicly listed pawnbroker chain. The brand is known for its good valuation for gold items, as well as innovations like island-wide pledge renewal services. 

(Note: A pledge is the industry terminology for the loan you take on your item.)

Money Max

Operating in Singapore as well as Malaysia, Money Max offers a mix of pawnbroker services and trade and retail of luxury lifestyle pieces such as watches, bags and jewellery. It has its own in-house line of gold wearables (916 Love Gold).

The chain operates 42 stores in Singapore (making it the second-largest), and is known for its high valuation in luxury leather goods. It makes for a good candidate if you’re looking to trade in your Hermes or LV.

ValueMax

With 35 outlets in Singapore, ValueMax is the third-largest pawnbroker on the island. However, it holds its own share of fans, and outlets are known to be particularly crowded on weekends.

The SGX-listed pawnbroker also has the longest history among its competitors, having been established in 1998, which means the brand has over three decades under its belt today. It offers shariah-compliant services, as well as online valuation and online pledge renewal. 

When should you use a pawnbroker and what fees do they charge? 

Pawnbrokers are an easy and convenient way to raise cash on a short notice, provided you have valuables that you can pledge for a loan. 

However, compared to other methods, such as selling to another buyer on Carousell or trading in for credit (as with computers and mobiles), you may not get the best value at a pawnshop.

You may get a quote of around 60 per cent of the item’s retail value, although other factors such as condition and brand may sway the needle in either direction. 

Pawnbrokers charge interest of between 1per cent and 1.5 per cent monthly on your pledge. So if you trade in your Panerai for $1,000 at 1.5 per cent interest, you’ll need to pay $15 in interest every month. 

This is lower than credit cards, which typically charge around 2.5 per cent interest per month, and certainly better than licensed moneylenders which charge 4 per cent per month.  

Which is better for getting cash: Pawnbrokers or personal loan?

Pros	Cons
Pawnbrokers	– Easy to get cash, little to no credit checks – Low interest of around 1.5 per cent per month– Can get cash on the spot– May choose not to pay back loan	– Loan amount depends on the valuables you pledge – Valuation offered may be lower than, say, trade-in or resale – Short loan tenure, have to renew periodically
Personal loans	– Loan amount between 4 to 10X your salary – May choose longer loan tenures for easier repayment– Interest can be attractively low, especially with promotions	– Credit and background checks required to qualify for loan– Application process usually takes a few business days – Loans have to be repaid according to terms

When deciding whether to use a pawnbroker or a bank’s personal loan, there are two main considerations you should make. 

Firstly, while pawnbrokers offer good interest rates, the amount you can loan depends on the items you pledge. If you need, say $10,000, but don’t quite have the Rolexes, Birkins or IWCs, you will be hard pressed to find a pawnbroker who can furnish the amount.

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However, banks typically approve personal loans of 4 times (up to 10 times in some cases) your monthly salary, without requiring you to pledge items of similar value.

Also, bank personal loans are no slouch either when it comes to interest rates. You can find attractively priced loans, especially during promotion periods. 

Secondly, pawnbrokers usually evaluate your pledge and disburse your loan on the spot. As your loan is backed by collaterals, there is no credit check required.

This makes pawnbrokers a much more convenient and faster way to get a loan, compared to the normal application and approval process required by banks for unsecured loans. 

An ancillary point is that with a pawnbroker loan, you do not have to pay back the loan if you do not intend to redeem your pledge, which gives you more flexibility in your financial options. 

This article was first published in SingSaver.com.sg.