In the world, around 2.1 million loan agreements are concluded each year through pawn shops, with the company’s turnover amounting to about a million. Therefore, the pawnshop can be described as a popular means of short-term procurement of smaller amounts of money.
When Is It Worth Going To The Pawnshop, And When Is It Not?
We recommend going to the pawnshop in Metropolitan area (เขตปริมณฑล which is the term in Thai) whenever all other sources of money are exhausted and the borrowed money is urgently needed. In other words: the bank does not issue an installment loan, no overdraft facility can be used, and neither can your group of friends help out. Nevertheless, for example, an urgent car repair has to be financed.
Should The Pawnshop Always Be The Last Option?
Yes, in principle, the pawnshop is only seen as an emergency solution. The reason: The loan costs are calculated on the year quickly at 30 to 50 percent. Because in addition to the pure interest, the pawnshop may also charge fees for the safekeeping and maintenance of the pawned items. For comparison: even the overdraft facility, which is expensive in the eyes of many consumer advocates, costs a maximum of between eleven and 13 percent per year.
What Criteria Should I Use When Deciding “Pawn Shop Vs. Loan”?
Pawn loans and loans are not to be seen as alternatives; instead, there is – from the borrower’s point of view – a clear ranking:
- Credit
- Pawnshop
The high costs of the pawnshop are “to blame” for this. You should, therefore only contact a pawn shop if:
- an acute need for money
- does not receive a regular loan due to lack of income or lack of collateral
- has any objects that he can pawn
- and can do without the seized valuable item in an emergency.
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