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5 Things Borrowers Should Know About Pawn Shops in Singapore

While pawn shops have been part of Singapore’s economic market, they have only gained popularity in recent decades. In the past, the country’s middle-class frown upon those who avail the services of pawn shops. Today, pawn shops are chosen for instant cash loans.

In Singapore, when you pawn a valuable item like jewellery, gadgets, or other personal belongings, the shop’s expert valuer decides on the value of your pledge. They usually give 60% to 80% of the pledge’s market value. You are then given 6 months to return the amount. If you fail to pay, the pawn shops with auction off the pledge.

Although pawn shops have helped thousands of people in the past, taking a loan from them is not for everyone. Before thinking of pawning your prized possession or your family heirloom, think first if the loan terms and agreements of pawn shops fit you. Here ate 7 things borrowers should know about pawn shops in Singapore.

1. Pawn shops charge interest

Contrary to popular belief, pawn shops do charge interest. When you redeem your pledged item to the pawnshop, you have to pay them back at a higher price than they paid you. Most pawn shops charge about 1% for the first month and 1.5% for the next months. This means that the longer it takes you to redeem your pledge, the more money you end up paying.

On the other hand, take note that the interest rate of credit card companies is higher than the interest rate of a pawn shop. Most credit card companies charge an average of 2% interest per month. This is in contrast to an average of 1.5% interest rate per month of a pawn shop. This comparison shows that borrowers can get some better deals through pawning than other loan options.

2. Pawn shops’ rates are higher than personal loans

While you might think that pawn shop deals are enticing, remember that personal loans from licensed loan company have 1% effective interest rates. This is lower than the effective interest rate of pawn shops which is at 1.5%. This means that if you are qualified to take personal loans, you better choose taking loans from licensed loan company instead of dealing with pawnshop Singapore owners.

Singapore has tens of reliable licensed moneylenders who offer reasonable loan deals. If you plan to buy a property or open a business, you better check first the loan offerings of the best loan company near you. You can then compare which of these loan deals work for you best. Make sure that you are making the best decision when it comes to applying for loans.

3. Pawn shops have fewer restrictions, requirements

One positive note about choosing a pawn shop is that you do not have to present a lot of requirements. In many cases, borrowers could just visit a pawn shop near them and could get the cash they need. This particularly works best for people who do not have a good credit record. Going to a pawn shop is easier for them than applying for a loan to licensed loan companies.

Customers usually choose pawn shops because they do not ask for a lot of requirements. Most pawn shop Singapore owners only ask customers for the pledged item and the proof of identity. Their loans can then be processed within a day. This is in stark contrast to licensed loan companies who ask for financial proof and other documents.

4. Pawn shops return the excess money from your auctioned pledge

Another good thing about pawn shops is that they are required by the Pawnbroker’s Act to give you back an excessive amount from the auction sale of your pledge. For example, if you pledged a piece of jewellery valued at $10,000 which was then auctioned at $15,000, the pawn shop is required by law to give you back the $5,000 excluding fees and interest rates.

In this way, borrowers are ensured that pawn shop owners do not lowball their pledge item. They can still get the value of their pledge. Also, this is a reminder to the pawn shop expert valuer to give the borrower an amount near the market value of the pledge. This provision from the Pawnbroker’s Act serves as another layer of protection to borrowers.

5. You can buy gold here at a lower price

Aside from finding loan deals, pawn shops also sell items like gold. For those looking to buy gold bars and other gold items, going to a pawn shop is a better option than going to goldsmiths. Pawn shops offer lower prices for their gold item. Also, buyers can buy second-hand gold items.

The golden rule in Singapore is that if you are selling gold, go to a goldsmith. But, if you are buying gold, go to a pawn shop. A pawn shop might be the best location for those wanting to invest in gold.

6. A pawn shop is a good option if you are uncertain if you can pay back

Let’s face it. Pawn shops are not for everyone. Aside from relatively higher interest rates compared to personal loans, borrowers can only get a limited amount of money. For borrowers who need a lot of cash, it is better to apply a loan to licensed loan companies. Licensed moneylenders in Singapore can offer competitive loans that can truly help borrowers from their financial problems and concerns.

But for those who are not sure if they can repay their loan, they are highly advised to get the services of pawn shops. Borrowers are not forced to pay their loans or debt. For unpaid loans, the pledge will just be auctioned, which means that borrowers will not have a debt.

7. It’s not wise to liquidate your valuables through a pawn shop

If you are willing to give up your valuable property and prized possession, pawn shops are not for you. Remember that you can only get around 60%-80% of the market value of your pledge from a pawn shop. If you wish to see the true value of your pledge, it is better to sell your item to interested buyers who are willing to pay you a lot of cash.

If you believe that what you own is a valuable item, it is best to look for a market that understands and appreciates your offer. An evaluator from a pawn shop only depends on his/her knowledge of the market in general. If you are able to find the right buyer to a valuable item you are selling, you can even get a lot of cash through selling. There are a lot of online shops and social media sites where you can find the best customers for your valuable item to property.

One thing you can do before deciding if pawning gives you more cash than a loan company is to check out a pawnbroker you trust. In Singapore, you can start your research by checking the interest rate and valuation of pawnbrokers like Money Max and Value Max.Here is a good list of pawnshops in Singapore. You can check if there is one near you. After checking them out, you can have an idea of whether dealing with pawn shops is still the best way for you to liquidate your valuable items.


Singapore offers a lot of options for people needing loans or cash. For those who have a bad credit record and who are unable to comply with the many requirements of licensed moneylenders, applying loans to a pawn shop might be the best option. Also, if you fail to repay your loans to a pawn shop, you will not earn debt. This is important for people applying loans that do not have the capacity to repay their loans.

Singapore laws have ensured the protection of pawn shop clients through the Pawnbrokers Act. This means that people who are choosing this option will get another layer of legal protection. This Act also ensures that clients get the right value of their pledge.

On the other hand, pawning is not the best option for all people applying for loans. Licensed moneylenders can provide a higher amount of loans. Also, they charge lower interest for their loans. For people who need a big amount of money, licensed moneylenders can be the best option.

In Singapore, a good alternative to pawn shops is personal loans from banks, moneylenders, or even from friends and family members. These institutions and individuals can give better loan deals, especially if you have a good credit score or have developed a good relationship with them. Try to look more into these alternative options so you can be sure that you are choosing the best option when it comes to applying for loans.

One company that has shown a commitment to its clients is Instant Loan. It greatly helps borrowers choose the best option by comparing the best loan offers from top financial providers in Singapore.

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