Since the 1800s, pawnshops have operated in Malaysia . The Pawnshop Ordinance of 1871 served as the foundation for the current Pawnbrokers Act 1972, which was revised in 2004 to enhance consumer protection.
A pawn shop license, also known as a pawn brokers license, from the Ministry of Housing and Local Government (KPKT) in order to operate a pawn shop lawfully today. This license maintains industry regulation, safeguards consumer assets, and guarantees ethical business operations.
Why People Choose Pawnshops
For many people, a pawnshop is the fastest way to get money without going through the red tape of banks. Here’s why:
- Fast access to cash – just bring a valuable item and a few details.
- No credit checks – CCRIS and CTOS reports don’t matter.
- Secure storage – items are kept safe until you redeem them.
- Flexible redemption – pay back and collect anytime within the period, or extend if needed.
While gold is the most common item pawned in Malaysia, licensed pawnshops increasingly accept branded watches, luxury bags, and even high-value electronics.
Licensed vs. Unlicensed Pawnshops
Here’s why a licensed pawn brokers license makes a difference:
- Governed by Law
Licensed pawnshops are strictly monitored under the Pawnbrokers Act 1972. Unlicensed ones often pose as second-hand shops, operating without oversight.
- Insurance Coverage
Licensed pawnshops must be insured, so if a theft or burglary happens, your valuables are protected. Unlicensed shops usually can’t offer the same assurance.
- Security Standards
With reinforced storage rooms, alarm systems, and safety protocols, licensed pawnshops meet government security standards. Unlicensed operators rarely follow such requirements.
- Interest Rate Control
According to the law, authorized pawnshops are only permitted to charge 2% interest per month. On the other hand, unlicensed operators may charge 3%, 12%, or more.
For instance, you pawn a RM2,000 gold bracelet.
- You will receive the entire RM2,000 from a licensed pawnshop, with interest only costing RM40 per month.
- You could be spending four times as much, or RM160, a month, at an unregistered pawnshop that charges 8%. In certain cases, they even take that amount out of your account up front, leaving you with significantly less money.
This is why it’s crucial to confirm that the pawn shop has a current license before giving them your belongings.
How to Recognize a Licensed Pawnshop
Every licensed pawnshop must clearly display their license, which is different from a standard business license. Look for the words Pawnbrokers Act 1972, signed off by a KPKT officer. If it’s not there, you’re probably dealing with an unlicensed operator.
Final Word
Not all pawnshops are the same. A shop with a valid pawn brokers license guarantees your valuables are safe, your loan terms are fair, and your rights as a customer are protected
Looking for a trusted choice? iPajak is your best pawn shop in Malaysia, offering licensed services, transparent terms, and peace of mind every step of the way. Visit us today and experience hassle-free pawning with confidence.