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1. PAWNSHOP
CHAPTER 7
BY: NECIA JOY N. MAGBOJOS
BSBA-FM

2. HISTORY OF PAWNSHOP
The First Pawnshops
• More than 3,000 years ago, pawn shops first
emerged in Ancient China as a method of
granting short-term credit to peasants. Some
pawnbrokers operated independently, but over
time most of these businesses were run
through pawn shops.

3. • The word “pawn” stems from the Latin word
“patinum” meaning cloth or clothing. For the
working class, clothes were often the most
valuable items they owned. Though the majority
of pawn shops have always been privately
operated, some public pawn shops were set up
as charitable funds in Europe in the 18th century,
offering low interest loans to the poor to help curb
debt.

4. WHAT IS PAWNSHOP?
- A pawnshop or pawnbroker is a business entity that lends
money to individuals based on the value of a collateral item,
without performing a credit check.
- “Customers pledge property as collateral, and in return,
pawnbrokers lend them money. Pawn loans are made on
everything from jewelry to electronics."

5. Process
- An individual in need of a small loan brings an item
and the pawnbroker appraises its resale value using
value books and the Internet.
Loan Amount
- Typically, pawnbrokers value a collateral item and
make a 30-, 60-, or 90-day loan to a customer based
on the value of said collateral.

6. Interest
- Interest rates vary from state to state as
each state has its own interest rate cap. Interest
rates range from 2 percent to 12 percent per
month on the loan amount.

7. Buying Items
-In some instances, customers bring in items to sell
outright instead of taking a loan to avoid paying
interest or simply because they no longer have use for
the items.

8. Selling Items
- Pawnbrokers sell purchased and collateral
items just as any retailer would. They display the
items on display shelves and in window
displays.

9. TRUSTED PAWNSHOPS IN THE
PHILIPPINES
- Pawnshops have always been relied
upon for such a crisis. Here’s Primer’s list
of the 5 most trusted pawnshops in the
Philippines, in no particular order:

10. 1. Tambunting Pawnshop
-Tambunting Pawnshop is the country’s oldest
pawnshop. First opened in 1906, they’ve served
the Filipino for over 100 years.

11. 2. M Lhuillier
- Known recently for its Kwarta Padala, M
Lhuillier is pretty much the go-to for most
Filipinos looking to pawn off any valuables for
cash.

12. 3. Cebuana Lhuillier
- Cebuana Lhuillier is often confused with M Lhuillier,
but has always been a trusted name by Filipinos when
they are in a pinch.

13. 4. Palawan Pawnshop
- As the name suggests, Palawan Pawnshop
started in Palawan in the mid-1980s (Puerto
Princesa City to be exact).

14. 5. PawnHero Pawnshop
- PawnHero.ph is an online pawnshop where
anyone can submit a pawn request anytime,
anywhere.

15. 6. Villarica Pawnshop
- Founded by Paz R. Villarica on 1954, the first
branch of Villarica Pawnshop opened in Quiapo,
Manila. Today, Villarica pawnshop has grown to a
trusted pawnshop for 26 years, with about 600
branches all over the Philippines.

16. 5 ADVANTAGES OF PAWNSHOP
1. Instant Access to Cash
- Sangla allows quick access to money when you need
it. Filipinos use pawn loans for various purposes, usually
to get through Petsa de Peligro, add to the capital for a
small business, and financial emergencies in the family.

17. 2. Easy and Fast Pawning Process
- Pawnshops allow their customers to borrow
money quickly, unlike government offices and
banks that take several weeks to approve loans.
3. No Credit Checks
- Credit investigations and background checks are a
common practice among banks and government lenders
to determine a borrower’s ability to repay a loan.

18. 4. No Effect on Credit History
- If you fail to pay back what you owe, it won’t hurt
your credit history and credit score. The only
consequence is that the pawnshop will get to keep
your pawned item.

19. 5. Safe Transactions with Licensed Pawnshops
- The BSP is the government agency that
regulates pawnshops in the Philippines. It
implements strict rules among pawnshops to
ensure fair, ethical, and legal money lending
practices.

20. 5 DISADVANTAGES OF SANGLA
1. High Pawn Loan Interest Rates
-The cost of redeeming collateral is high because
pawnshops charge high interest rates. For the major
pawnshops in the Philippines, monthly loan interest
rates are typically at 3% or 4% (See table below).
Others charge higher monthly rates at 10%.

22. 2. Low Appraisal
- If you’ll pawn a valuable item for the first time,
manage your expectation—the pawnshop won’t lend
you the amount equivalent to the full value of your
collateral.
3. Too Short Loan Terms
- When you get a pawn loan, you have only 30 days
to pay it back and redeem your collateral.

23. 4. Risk of Losing or Damaging Pawned Item
- If you still can’t repay within the pawnshop’s grace
period, it can keep your pawned item and put it up for
auction or sale.
5. Risk of Getting Scammed
- Beware of any type of sangla that asks for your
ATM card, bank account details, or ID as collateral.