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Pawn Shop vs Moneylender: Which Is a Better Option?

pawn shop vs moneylender
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Do you need quick cash for an emergency expense but traditional bank loans aren’t an option? Thankfully, you’re never short on options in Singapore. When it comes to quick cash, two options stand out: a pawn shop and a licensed money lender.

With 236 licensed pawnbrokers, pawnshops are common in Singapore. Pawn shops offer instant cash loans to individuals in exchange for valuable items. Licensed money lenders offer small loans – up to 6x your monthly income. The loans can either be unsecured or secured which involves a form of collateral.

So when it comes to a pawn shop vs a moneylender, which is a better option?

Pawn Shop vs Moneylender

Licensed pawn shops in Singapore are regulated by the Ministry of Law. As of December 2022, there are 236 registered pawn shops in Singapore. Pawn shops are a good option if you are rich in assets but need quick cash.

A licensed money lender, on the other hand, is a person or entity that offers small loans to Singapore citizens, Permanent Residents, and Foreigners with an Employment Pass. Licensed money lenders are regulated and registered under the Ministry of Law. As such, the amount they can lend as well as the interest rate and fees they can charge are regulated.

If both pawn shops and licensed money lenders provide quick cash, how are they different from each other? Take a look at the table below to explore the differences between the two to determine which one suits you more.

  Pawn Shop Licensed Money Lender

Type of Loan

Secured loan or collateral-based loan.

Can be a secured or unsecured loan

Repayment Term

6 months or your pledge will be auctioned off

Typically 12 months; Indicated in the Note of contract

Repayment Schedule

Not fixed repayment; you can pay as much as you can for every partial payment

Fixed repayment amount depending on your repayment schedule

Loan Amount

Typically 60% to 80% of the market value of the pledge

Up to 6x your monthly income if earning at least S$20,000 a year

Interest Rates

1% to 1.5% per month

1-1 4% per month


No snowballing of debt but you might lose your pledge if you fail to make repayment

Pay on time to avoid late interest and late fees 

Getting A Loan From Pawn Shops

Pawn shops only provide secured loans. This means you need to bring them an item (called a pledge) with a significant market value. Here’s how it works:

First, you pledge one or more of your valuable items, such as jewellery, luxury watches, or branded bags to a shop. The broker will evaluate your item and will lend you cash in return; typically 60% to 80% of the market value of your item.

Say for example you pledge a luxury watch worth S$23,000. You may get a maximum loan of S$18,400 (80% of the value). Note that there is no fixed formula for how much a pawn shop will value your pledge. That said, it’s best to compare different shops to find the best deal.

You have up to six months to repay the amount. Once you have fully repaid the borrowed amount, plus interest, you can get your pledge back. If you fail to make repayments for six months, you will lose your pledge.

Pros and Cons

Pros Cons

Your debt will not snowball if you fail to make repayment

One-time loan only; no revolving credit facilities

Accessible to individuals with bad credit rating

Amount you can borrow is limited to the value of your pledge

Useful for individuals who are rich in assets but have limited to no income

You need to own something worth pawning to get a loan

Relatively low interest rates



  • Must be 18 years old or older

Document Requirements

  • Copy of NRIC or passport or any valid identity proof
  • Proof of purchase or ownership of the item

Note: Pawn shops will not require proof of income, credit history, or credit rating.

jewelry store shop indoors - small business


Getting a Loan From a Licensed Moneylender

When you borrow from a money lender, you can choose to apply for unsecured loans or secured loans. With a secured loan, you can borrow any amount. However, you will have to provide collateral.

If you apply for an unsecured personal loan, you can borrow up to 6x of your monthly income depending on your yearly salary. Additionally, licensed lenders can only charge up to 4% interest rate per month. This cap applies regardless of the loan amount, income level, or repayment term.

Borrower’s Annual income Singapore Citizens and Permanent Residents Foreigners Residing in Singapore

Less than $10,000



At least $10,000

and less than $20,000


At least $20,000

6 times monthly income

6 times monthly income

Additionally, with a licensed money lender, you have a fixed repayment schedule. This will help you set aside money to pay the loan.

Aside from personal loans, licensed money lenders can provide you with tailored loan plans to suit your needs. Some of the most common types of loans include:

Do not immediately go for the first money lender that offers you a loan. Verify their credibility and license by checking MinLaw’s website. There you will find the complete list of licensed money lenders in Singapore.

Lastly, licensed money lenders are prohibited from advertising via social media, emails, SMS, and WhatsApp. They are only allowed to advertise their financial products through three channels:

  • Their official website
  • Business and consumer directories
  • Within or on the exterior of their business premises

Pros and Cons

Pros Cons

Provides fast cash loans

Higher interest rates of up to 4% per month compared to personal loans from banks

The loan application can be done online

Potential for your debt to snowball if you fail to make loan repayments on time

You can borrow up to 6x of your income; depending on your yearly salary

Failing to repay your personal loan will affect your credit rating

Fixed repayment schedule making it easier to budget



  • Age: At least 21 years old and above
  • Minimum monthly salary:
    • Singaporean or Permanent Resident: S$2,000
    • Foreigner: S$3,000


  • Copy of your NRIC card
  • Copy of passport for foreigners
  • Proof of residence such as a utility bill or tenancy agreement
  • Proof of employment such as 3 months’ worth of recent payslip, certificate of employment)
  • Work Permit or Employment Pass for foreigners
  • SingPass (to log into CPF, HDB, IRAS website)


1. Are Pawn Shops a Money Lender?

Under the Moneylenders Act, any person or entity, other than an excluded moneylender, who lends a sum of money in consideration of a larger sum being repaid is presumed to be a moneylender.

As such, while pawn shops are financial organizations with many similar features to licensed money lenders, they are not the same. Under the Moneylenders Act, pawn shops or pawnbrokers are considered “excluded moneylenders” and are licensed under the Pawnbrokers Act 2015. 

2. What Are Two Disadvantages of a Pawn Loan?

  • Pawn Shop Interest Rates: The 1.5% interest rate per month may be relatively low compared to credit card loans. However, it is still higher compared to personal loans from banks.
  • Loan Amount: Pawn shops give you a one-time loan and the amount is limited to the worth of your pledge. That said, if your pledge has a low value, you will be getting a low loan amount. Lastly, if you fail to repay the loan amount, you will end up losing your pledge.

3. Is It Better To Pawn or Sell an Item?

When you choose to pawn a valuable item, you are taking out a loan using your item (pledge) as collateral. This means the broker will give you a certain amount of cash and hold your item until you can fully pay the loan amount plus interest and fees.

As such, you are obligated to make repayments per month and must fully pay the loan amount in six months. Should you choose not to repay your pawn loan, the broker will sell or auction your pledge.

Choose to pawn if you need quick cash but are not willing to part with your valuable item. Only pawn items if:

  • Your credit rating is bad
  • Don’t have a steady stream of income
  • Your financial situation is uncertain in the near future.

On the other hand, if you sell an item to a pawn shop, you are simply going to leave with cash in hand and don’t have any obligation to the broker.

Sell your item if you no longer need or want an item and it makes sense to put the money to better use.

4. Do Pawn Shop Loans Affect Your Credit?

Pawn shop loans don’t affect your credit rating. Pawning isn’t included in any official documents. In that aspect, pawn shops are a good alternative if you are unsure whether you can repay your loan. However, failing to repay the pawnshop loan will lead to a loss of your collateral.

5. What are Other Alternatives to Pawn Shops or Licensed Moneylenders?

Need to borrow money but prefer not to pledge a valuable item at a pawn shop or take a loan from a licensed money lender, here are your other options:

  • Personal loans from banks: If you qualify for a traditional bank loan, you can consider taking out a personal loan. This is a good option if you have a good credit rating, a steady income, and don’t mind waiting a few days to a week for approval.
  • Borrow from family and friends: While asking for financial assistance from a family member or friend is a sensitive subject, it’s still a good alternative. They are less likely to charge high interest, lowering the cost of taking a loan.
  • Ask for a payday advance: If you don’t want to seek help from family or friends, why not ask your employer if you can receive your salary in advance? This will help you get quick cash without paying interest.
  • Apply for financial assistance through government schemes: If you need help paying off your debt, consider applying for a Debt Repayment Scheme. This is a debt consolidation plan that allows you to repay your loan within a set timeframe at no additional interest charged.

Read also our moneylender guide


When the time comes that you need financial assistance, you have plenty of options in Singapore. For one, you can borrow from a licensed money lender. They can provide you with fast cash loans in 30 minutes. Another option is to pledge your valuable item at a pawn shop.

Key Takeaway

  • Pawn shops are a good option if you are rich in assets but have limited to no income.
  • The pawnbroker will give you a certain amount of cash and hold your item until you can fully pay the loan amount plus interest and fees.
  • Pawn shops only offer secured loans. On the other hand, a money lender can provide an unsecured loan or a secured loan.
  • If you apply for an unsecured personal loan, you can borrow up to 6x your monthly income if you’re earning at least S$20,000 a year.

Looking to take a loan from a licensed money lender? Loan Advisor makes it easy to compare loan plans from the top licensed money lenders in Singapore. A one-stop loan comparison platform, Loan Advisor provides free, unbiased, and the most up-to-date information at the tip of your fingertips. Request up to three loan quotes today for free!

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