Understanding Pawn Shops: How They Work, Interest Rates, Alternative To Loans, etc.
There may come a point in our lives where we might need to seek additional financial help. Where do we look for financial help then? Friends, family, bank loans, licensed money lenders are all great alternatives. However, there is also another viable option: Pawn shops. While often overlooked, pawnshops also offer you great investment opportunities. However, like all things, you have to be prepared first. Doing the necessary homework and research is necessary. If you don’t understand how pawn shops work and how much interest they charge, you may end up losing money in the long-term. Lucky for you, we’ve done our due dillgence and broken down all you need to know about pawn shops in this article! How Do Pawn Shops Work In Singapore? Pawnshops work like this: you entrust a pawnbroker with one of your valuable items so that you can get a cash loan. You’ll have to repay the loan with interest by an agreed-upon date so that you can get your pledge back. If you can’t repay your loan, the pawnbroker will resell your pledge or melt your jewellery to create new ones. Usually, this period is about six months. However, each time you pay an instalment, you extend your repayment period by an extra six months. The problem is that your interest rate will grow too, so, if you can’t repay your loan within the assigned period, it’s best to surrender it all together. Otherwise, you’ll end up paying double or triple its value because the loan you receive amounts to about 60% of the market value of the item you’re pawning. Each pawn shop has a valuer who decides how much your pledge is worth. Therefore, pawning is a type of collateral-based loan. Pawn Shops In The Past Vs. Pawn Shops Now Pawning is a 3,000-year-old activity. Historical sources show that pawning was popular throughout the world, but especially lucrative in the Roman Empire, Greece, and China. Peasants pawned their clothes to get loans because clothes were the most valuable things they had. That’s why pawnbrokers got the reputation of being the “poor man’s
