All You Need to Know About Pawn (Pajak Gadai) in Malaysia

In Malaysia, the history of pawn shop existed since the year 1871 and governed by the Pawnbrokers Act 1972.

After these years, pawn loan still one of the favorite financing option for Malaysian. Why? It’s an easier and faster way to get quick cash by compared to get a loan from a bank. 

In this article, we would like to share you some knowledge about pawning and tips when dealing with a pawn shop in Malaysia.

1. Why Pawn?

   1. Easy & Fast
      Pawn shop only required you to fill up a form and perform a quick assessment of your pawn items that takes mostly less than 5 minutes. Whereas a personal loan application from a licensed lender could take weeks to be approved, and the requirements are much higher.
      
      
   2. No Credit Checking on CCRIS / CTOS
      A personal loan may get rejected if you don’t have much credit history or had some bad payment records in CCRIS or CTOS.
      
      
   3. Low risk
      What could be scarier than can’t pay back to a loan shark (ah long)? For Pawn Loan, your pawned item will be auctioned (lelong) if you couldn’t pay back and it won’t affect your credit record.
      
      
   4. Secure
      The pawn shop has the responsibility to safekeeping your pawn item.
      
      

2. How much is the interest charged?

   Under the regulation, the maximum interest rate is 2% per month (24% per annum). It is higher than a personal loan from the bank but still much lower than the loan sharks.

3. What items can be pawned?
   Mostly Gold products and Jewelry.
   Some pawn shop also accepts other high-value goods such as the luxury watch, luxury bag & garments, computer, smartphone, etc.
   Tips: You may contact the pawn shop before you visit the outlet if you not sure if your items are pawnable.
   
   
4. What to bring?
   1. Your Identity Card
   2. Your item(s) to be pawned
   3. Certificate of Authenticity (If has)
   4. Original Purchase Receipt (If has)
      
      
5. How long is the term of the loan?
   In Malaysia, 6 Months. You may extend with the pawn shop before the loan period ends.
   
   
6. What happens if I didn’t pay back / redeem the pawn?

   When you can’t pay back at the end of six months term, you may renew then pawn for not less than 3 months. Of course, you will need to pay the monthly interest for the additional month.

   When the term is over, the pawnbroker automatically owns the item which is less than RM 200. If the value of the pledge is more than RM 200, the pawnbroker will sell the pawn by auction. Any surplus from the auction bid shall be given back to the you.