Personal Loans

7 Things Singaporeans Should Know About Pawn Shops


Ryan Ong



Back in the ’80s, middle-class Singaporeans associated pawn shops with poverty. If you were seen walking into one, your acquaintances would never let you live it down; they immediately assumed you’re an alcoholic, glue-sniffing, 4D addict. But these days, pawn shops are becoming an accepted part of the loans scene (sigh) and recent reports show that they have been on the rise since 2008. At least know this about pawn shops then:


1. Pawn Shops May Be Better if You’re Uncertain About Repayment

Let’s say you have the financial stability of the average 7-11 robber. You’re not even sure you can make regular repayments, but you still need a loan. In that case, you’re better off using the pawn shop than a money lender.

When a pawn shop loans you money, your pledge (the item you’re hocking to get the loan) is the ultimate loss you can incur. For example:

Say I borrow cash from a licensed money lender. I then miss numerous repayments. Every time I miss a repayment, the interest rate compounds on the debt I owe. Over a period of months or years, I’ll end up owing several times the amount I borrowed.

Now let’s say I use a pawn shop. I hock my fancy watch for a bit of cash. After six months, I still can’t make any repayment. The pawn shop then sells my watch at an auction, and that’s the end of my debt. It’s not going to snowball any further.


2. Pawn Shops Charge Interest


Calculator and coins
“It’s an interest free loan. As in, we give you this loan with absolutely no interest in your welfare.”


When you hock something at a pawn shop, you cannot redeem it at the same price you got for it. There is interest on the repayments.

In most pawn shops, the interest rate on loans is 1% for the first month, and 1.5% for subsequent months. So the longer you take to redeem your pledge (i.e. pay back the loan), the more money you’ll end up paying.

A pawn shop’s interest rate is lower than the average credit card (which is about 2% per month).


3. You Have Six Months to Redeem Your Pledge

Most pawn shops will hold your pledge for six months, before auctioning it off. Every time you make a repayment, they will extend the time by another six months.

Of course, the interest payable also grows with each month (see point 2). Past the one year mark, it may be prudent to simply surrender the pledge than to keep paying.


4. Avoid Using Pawn Shops to Liquidate Assets


Singapore coins
In hindsight, “Made in China” wasn’t the best “funny” inscription for my $15,000 Rolex.


A pawn shop is meant to give out loans, not compete as an eBay alternative. When they accept a pledge, they will extend loans that are around 60% – 80% of the full value of the pledge (this amount can vary significantly, based on the valuer’s judgement).

Using a pawn shop to liquidate your assets is probably not the best idea. You will almost always get less than selling to a watch trader or goldsmith.


5. Pawn Shops are More Accepting than Banks or Money Lenders

As long as you can bring the pledge and proof of identity, most pawn shops are happy to extend a loan. They have fewer restrictions than banks, which will demand a minimum income, CPF documents, etc.

If you have a bad credit rating, or haven’t got a stable job (and why the hell are you taking a loan then?) you might want to try the pawn shop first. You should also follow us on Facebook, where we explain the intricacies of not going broke in Singapore.


6. Pawn Shops Give You the Surplus from Auctions

Let’s say you hock your fancy watch for $9,000. You make no repayments, and it gets auctioned off.

At said auction, a large crowd of people fancy the watch. Bidding gets fierce. In the end, the watch ends up selling for $11,000. What happens to the excess $2,000?

It goes back into your pocket, that’s what (minus any other fees like interest).

This also means that pawnbrokers aren’t inclined to rip you off with unfairly low valuations. If something is auctioned for more than they gave you, they still won’t pocket all of the profits.


7. Pawn Shops Can Be an Awesome Place to Buy Gold


Gold brick
It’s *very* solid gold. I found out when I paid the taxi uncle with it and asked for change.


When you want to sell gold, always visit the goldsmith first (see point 4). But if you want to buy gold, be sure to visit pawn shops as well as goldsmiths.

You may recall that, during the last gold flash crash, the pawn shops in Little India looked like McDonald’s outlets running a Hello Kitty promo. Those crowds weren’t there to pledge anything. They were there to buy gold from pawnbrokers.

Besides occasionally charging less, some pawn shops also don’t charge GST. They may be operating under the Gross Margin Scheme, in which GST is based on their total profits (as opposed to the price of their items). All things being equal, this can make pawn shops cheaper than goldsmiths.

The only drawback is that pawn shop gold is second-hand. You may not get it in the original packaging (can be annoying for collector’s edition coins, if you’re into that).


Image Credits:
Public Domain, Images_of_Money, Aleksandr Zykov, GoldMoneyNews

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Ryan Ong

I was a freelance writer for over a decade, and covered topics from music to super-contagious foot diseases. I took this job because I believe financial news should be accessible and fun to read. Also, because the assignments don't involve shouting teenagers and debilitating plagues.

  • disqus_yiUDr7KjmC

    I own 2 pawnshops in Canada. This system you mentioned does not make any common sense. If a watched is hocked for 9000, and auctioned for 11000-but 2000 goes back to original owner; the pawnbroker has made no profit. That’s not plausible.
    Why would a pawnshop loan out 9000 dollars to break even after 6 months or so. I do not think that is correct. or logical in any sense.


    • Jayden

      It’s true. Excess profits, less interest and auction fees, from the auctions are returned to the original owner. The pawnbroker only “profits” from the interest received. It is stated in the Singapore Pawnbrokers Association FAQs too (

  • Jayden

    I agree to what you said here. Pawnshops take in gold based on the ‘international gold price’ of the day which goldsmith shops usually take a huge cut (15% to 25%, some even 35% off the selling price).

  • help

    Can I check if anyone knows if I can check if a particular person had pawn anything in the pawn shop before with particular?

  • jj

    Hi! Do the pawnshops in singapore send mail to your homes when you don’t pay back the loan?