Renew Auto Insurance
Everything You Need To Know About Pawnbroker

Comprehensive Guide To Pawnbroker

Everything You Need To Know About Pawnbroker

In the wake of the Malaysia Government Movement Control Order (MCO), there are lost jobs, taken pay cuts, and bills continue to pile up. One relatively good news here is that you have a few options if you’re looking for a source of funds to survive. One of these is consulting a pawnbroker.

The Basics Of Pawnbroking

The services of a pawnbroker are strictly regulated by law under the Pawnbrokers Act 1972. So, patronizing this channel is entirely legal. You can do two things with a pawnbroker.

  • Sell them your valuables for cash.
  • Secure a collateral-based loan.

The first option is self-explanatory. It would be best if you learned more about the second.

Getting a Collateral-Based Loan From a Pawnbroker

Here’s how securing a collateral-based loan from a pawnbroker work in 5 steps.

  1. Take a valuable item, such as a diamond ring or gold jewelry, to a select licensed pawnbroker.
  2. The pawnbroker will use their preferred system to value the item.
  3. The Pawnbroker will offer you a loan (with interest) based on the item’s estimated value.
  4. If you agree to the loan amount, you’ll take the cash, collect your pawn slip, and leave the valuable item behind as your collateral.
  5. Pay the loan back per the agreed terms and get your collateral back.

7 Things To Remember Before Leveraging Pawnbroking

  • Only work with licensed pawnbrokers. All registered pawn shops are required to show their license, so be sure to check that of any shop you want to deal with.
  • The maximum amount you can borrow from a pawnbroker is RM 10 000.
  • No pawn shop can legally charge you more than 2% interest per month or 24% interest a year.
  • The loan term from these sources typically doesn’t exceed six (6) months. However, if you’re struggling to repay the loan, you can work out a more extended arrangement with your pawnbroker.
  • If you still can’t pay what you owe after the extension, your pawnbroker can legally hold an auction to sell off your collateral.
  • If the pawnbroker sells the collateral for more than your loan is worth, you’re entitled to receive the balance.
  • Pawn shops typically value your item for lower than it’s worth in reality.

Pros Of Using a Pawnbroker

  • If you can’t meet the loan’s repayment terms, the worst that’ll happen is you’ll forfeit your collateral.
  • If you cannot pay the loan back, your Credit Score won’t be affected in any way.
  • The payment system here is considerably more flexible.
  • You don’t have to show documents to secure this loan.

Cons Of Using a Pawnbroker

The interest rates here are always considerably higher. It could damage your valuables while it’s in the care of the broker. Because there’s no safety net here, you could keep using your valuables as collateral until you eventually have nothing left.


Try to make consulting a pawnbroker one of your last resorts.

Leave a Reply