Think pawnshops or “sanglaan” are not for you? Don’t slam the door on pawn loans just yet! While they’re easy to apply for, there are also risks to think about. Find out more below!

 

Pawnshops are practically everywhere in the Philippines. You see them during your morning commutes right beside regular businesses like laundromats, convenience stores, restaurants, etc. Popular names include Cebuana Lhuillier, Palawan Pawnshop, Tambunting Pawnshop, Villarica Pawnshop, among others.

 

The reason why pawnshops are so prevalent in the country is how easy it is to borrow money from them compared to other more traditional lending institutions. But of course, that doesn’t come without its cons. What exactly do you need to do to loan money from a pawnshop and what do you need to look out for? Have all your burning questions about pawn loans answered in this handy blog.

 

Continue reading to weigh your options with regards to pawnshops and pawning your valuables.

 

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How do pawn loans work?

As said earlier, there are loads of pawnshops in the Philippines and that’s because it allows people to get money the easy way. All they need to do is hand over a valuable object as collateral to the pawnshop, whether it’s an expensive piece of jewelry, a gadget, a luxury item, a car, land title, etc. The shop will then give you a loan should they accept your valuables.

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Pros and Cons of Pawnshop Loans

 

Pros of Pawnshops:

 

1. Accessible and fast – Again, there are many pawnshops in the country, some of which are open 24/7 for emergencies if you need cash ASAP. All you need to do is to bring your collateral at the nearby pawn shop, with no more hassles. 

 

2. No need for credit history – This is another reason why Filipinos go to pawnshops for loans, because there is no need for background checks or applications. You hand over your collateral and you settle on the date you come back for it as well as the value that you can pawn it for. Plus, pawnshops don’t report their customers’ credit to the authorities, so you don’t risk your credit history being dirtied.

 

3. Licensed pawnshops – The BSP regulates pawn shops, so make sure that the one you go to is BSP-supervised! You can sleep well knowing that because of this, the shop won’t run away with your collateral as the BSP ensures that business in pawnshops is ethical and legal.

 

Cons of Pawnshops:

 

1. Your collateral may not be returned, or it could break – This is the risk that comes with pawnshops. You wouldn’t want this to happen especially if the valuable you used as collateral is a family heirloom, for example. Or if it’s a laptop that you need for work. It could also possibly be damaged while in the possession of a pawnshop. You never really know how safe your collateral is.

 

2. High interest rates – Similar to online loans, because it’s so easy to process, the interest rates are normally higher, typically around 3-4% per month. Licensed pawn shops such as Cebuana Lhuillier, M Lhuillier, Tambunting Pawnshop, and other big names offer this interest monthly.

 

3. Low prices – Pawnshops are known for lending at low prices, so don’t expect to get the full value of your collateral. You can expect to get maybe half the price, if ever.

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What are the types of items you can pawn?

You can pawn multiple types of items in the Philippines. Do you have any of these? Then you’re most likely qualified to get a pawn loan!

 

• Jewelry – Jewelry is probably one of the most common things to pawn in the country. All you need to do is make sure it is authentic to borrow more money out of it—gold-pleated types are not as precious as the actual pawnable pure 18K and 24K gold pieces. Make sure you understand its value by checking the craftsmanship, design, weight, types, and color.

   

• Gadgets – Pawn shops accept gadgets such as laptops, video gaming consoles, smartphones, tablets, etc. But before you bring them to the shop, you have to ensure that it’s in good working condition, whether in quality or functionality. Also, to be safe, delete important items in your storage for privacy reasons.

   

• Cars/automobiles – Thinking of a collateral loan using your car or automobile? Try reading our blog focusing more on collateral loans and the institutions that have it as a product. Car loans are also known as sangla OR/CR, so you may want to look that up.

   

• Art – Got antiques or works of art from your grandparents or any of your family members? You can use these to get a pawn loan, whether that’s a painting, sculpture, stamp collection, old money, or whatnot. It’s worth a shot to see how valuable they are.

   

• Appliances – You may also hand over various home appliances such as refrigerators, sound systems, flat screen televisions, and ovens. The newer the appliance is, the more value you might be able to get from it.

   

• Authentic luxury goods – Got designer items like bags, shoes, belts, and sunglasses from big-name brands like Louis Vuitton, Gucci, Chanel, and the like? You can pawn these items as well. You can help by proving its value by handing over a Certificate of Authenticity. If you don’t have this, it should be fine since staff can usually tell which is fake and which is real.

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How much is the usual interest rate for pawn loans in the Philippines?

While they’re super easy to get, pawn loans aren’t the cheapest you can find. As stated earlier in this blog, the interest rates offered by major licensed pawn shops in the Philippines are around 3-4% per month.

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How do you get loans from pawn shops in the Philippines?

Pawning is generally something easy to do, which is why many people in the Philippines prefer to go to pawn shops for loaning. Here’s how:

 

1. Find something valuable to pawn – Read through the list above and search for something of yours that you can pawn. If it has certain documents or certificates that can prove its value or authenticity, bring those to the pawnshop as well.

 

2. Research on legitimate and trusted pawnshops – Before running to the nearest pawnshop, you’ve got to check if they’re legitimate and if they’re supervised by the BSP. Here’s the list of BSP-regulated pawnshops for your convenience.

 

3. Prepare valid IDs – Whether that’s a driver’s license, passport, national ID, postal ID, etc., bring it with you too.

 

4. Show your item to be pawned – Appraisal begins immediately, and you and the pawnshop must reach a mutual agreement on the charges and the value.

 

5. Receive your money and the pawn ticket, if applicable – Some pawnshops issue pawn tickets, which you will need to show when you claim your item or if you want to renew your pawn. Sign this document if ever the pawnshop gives it to you.

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A better and safer alternative to pawn loans

We get that there can be a lot of downsides to pawn loans. You may not have something you could pawn or you’re willing to part with, or you just might not like the risks that come with it. Another alternative to pawn loans is a quick personal loan you can get online! There are many websites and apps that offer it, but the best one you can find is from Tonik!

 

Tonik’s Quick Loan is fast and super easy to get—all you need is an active Tonik Account, a valid government ID, and an income document like your ITR, Certificate of Employment, pay slip, etc. Then you’re able to sign up for a loan and get approved in just 30 minutes! What else is so awesome about it is that you don’t need credit history too (just like a pawn loan) and you can get your loan funds disbursed instantaneously. Feel free to choose your own terms as well, whether that’s in a few months' time or 12 months!

 

No more being anxious about the item you’ve pawned. Getting a loan has never been this convenient. Try out Tonik’s Quick Loan now.

 

  

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Pawn Loans FAQs

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What are the requirements for pawnshop loans?

Requirements aren’t a lot for pawnshops, honestly! The biggest pawnshops in the country only require the following: 

• Valid ID or identity document

• Your collateral

And you should be good to go!

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What happens to your pawned items if you don’t pay back the loan?

The result of you not being able to pay back your loan is simple—your item will be claimed by the pawnshop. They can now sell your valuable or auction it off against your will. So make sure to pay off your loan if you happen to pawn something extremely irreplaceable, like a family heirloom or a huge asset that is of use to you, like your car or home.

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What’s the best pawnshop in the Philippines?

While “best” is quite a subjective word, the most popular pawnshops in the Philippines with multiple branches and networks include M Lhuillier, Cebuana Lhuillier, Palawan Pawnshop, Tambunting Pawnshop, and Villarica Pawnshop. You can try one of these pawnshops if you’re on the hunt for trusted ones. On the other hand, you can also check the list of BSP-regulated pawnshops for more options!  

 

Sources:

1. Villarica Pawnshop Philippines – All The Best Loans
2. Pawn Loan in the Philippines: Sangla Basics You Need to Know
3. Should You Take a Pawnshop Loan? - NerdWallet
4. Five High Value Items You Can Pawn | Cebuana Lhuillier Pawnshop