Licensed Pawn Shops vs. Illegal Money Lenders: Avoid Loan Sharks and Unlicensed Pawn Shops

Baca artikel ini dalam Bahasa Malaysia

What is a licensed pawnshop?

Licensed pawnshops such as Pajak Gadai Wangi are regulated by the Ministry Of Housing And Local Government and must comply with the Pawnbrokers Act 1972. The Pawnbrokers Act 1972 was enacted to ensure that the rights of the borrower are protected. The legal obligations of licensed pawn shops when dealing with customers include the use of proper paperwork/ records  and fair collection methods.

Pajak Gadai Wangi -

• Charges only 2% interest per month on loans with gold/ jewelery as collateral.
• Loan duration is 6 months or earlier and renewable for another 6 months.
• Issues a pawn ticket with full description of pawn items for every pawn transaction.
• Stores all pawn items carefully in a strong room with CCTV surveillance 24/7.
• Gold is valued on the spot based on daily gold prices.
• Deals with customers in a fair and professional manner.
• Regulated by the Ministry Of Housing And Local Government and complies with the Pawnbrokers Act 1972.

What are loan sharks/unlicensed pawn shops?

• A loan shark is a person or body that offers illegal unsecured loans at high interest rates to individuals, often backed by threats of violence.

• Unlicensed pawn shops operate without a license from the authorities and charge more than 2% interest per month for loans.

Loan sharks and unlicensed pawn shops are illegal moneylenders and operate outside the law. If you borrow from illegal moneylenders, you’ll likely:

1. Get a loan on very bad terms

• The terms on offer will usually be very unfair to the borrower.
• Illegal money lenders offer little paperwork in order to keep the borrowers in the dark as to how much they are actually paying.
• In order to evade the authorities, unlicensed pawnshops often issue borrowers with a purchase receipt instead of a pawn ticket. As a result, there is no evidence that an item has been pawned and borrowers are subject to the harsh conditions imposed by the unlicensed pawnshops to redeem their valuable possessions.
• Gold is valued at the whim and fancy of the unlicensed pawnshop operator and not based on market prices.
• Loan sharks keep borrower’s identification documents or passport as security.

2. Pay an extremely high rate of interest

• There are many cases of people borrowing a small sum of money from illegal money lenders and paying double or triple that original amount in interest.
• Most illegal money lenders will add extra charges or interest payments until the borrower is trapped in a never ending spiral of debt.
• Illegal money lenders take hold of the victim’s bank ATM cards along with the PIN in order to withdraw money directly from their accounts leaving them with little or nothing to get by on.
• Illegal money lenders charge high interest rates to “buy” pawn tickets from customers of licensed pawn shops.

3. Be harassed if you get behind with your repayments

• Loan sharks use violence and publicly humiliate victims to get their money.
• Be pressured into borrowing more from illegal money lenders to repay one debt with another.
• Loan sharks will disrupt the personal and family life, and businesses of their victims.

4. Lose your belongings

• Loan sharks often use violence to take away valuable belongings of borrowers to recover money.
• Illegal pawnshops are subject to raids by enforcement authorities from time to time. Illegally pawned items will be confiscated.
• Illegal pawnshops often impose unreasonable charges to force cash strapped customers to forfeit their pawn items. 

Conclusion:

It is illegal to borrow money from a loan shark/unlicensed pawnshop and you will be putting yourself at risk of violence and making your debt grow uncontrollably in a short period of time. You should consider the possibilities for getting cash at a legal and reputable source. Please call Pajak Gadai Wangi today at 082 – 348229.

Updated: 03 September 2012.