A pawnbroker inspects the collateral.
Inside an air-conditioned room, a man with a grim face sat behind a tall counter with a metal barrier separating him from incoming clients. Suddenly, someone approaches him with a piece of jewellery in hand. After inspecting the item, the man names his price. After a negotiation, a contract is then signed as a promise for the client to pay back his loan plus interest and reclaim the item. Then, the client walks out with a handful of cash. The entire process lasts only a few minutes.
Pawnshops, known in Thai as rong rub jum num — which are very noticeable by their maroon-coloured exterior dotted with Chinese characters — have long been a sanctuary for many Thais in need of quick financial aid, especially in this period when schools will open in less than two weeks. Some parents in need of money to pay for tuition fees rely on their neighbourhood pawnshop to settle their expenses until they can get their salary at the end of the month. After the Songkran holidays last month, pawnshops in provinces such as Yala, Buri Ram and Yasothon were reportedly packed with broke customers in need of quick money after their big spending during the long break.
Mana Kliangthong, director of Office of the Government Pawnshop, revealed that 500 million baht is now reserved within the state-owned pawnshops to prepare for an increasing amount of pawn business in this period. Other businesses may be dwindling in our current economy, but pawnshops remain busy.
“Before the school term begins, the amount of clients coming into the shops would increase by 20%. Most of them come in with gold as their pledges,” Mana said.
“When schools open, pawnshops benefit more than others,” said Prasan Gleebanjong, 59, manager of Tae Chun Hua pawnshop in Bangkok’s Khlong Toey area. “We always have a high amount of cash-flow from March to May — an extended period from the Songkran holiday into schools’ reopening.”
Each day, Prasan’s 30-year-old pawnshop has about 1.5 million baht stocked in the safety box. The manager said he welcomes 50-60 clients a day. It’s actually a low number, he said, compared to big pawnshops.
Among the patrons seeking cash from pawnshops in this period was Wana*, a cleaning lady who works in an office in Bangkok. She regularly visits a pawnshop near her workplace, going in with both her own possessions and, at times, valuables that friends and colleagues asked her to pawn for them.
“I lose count how many times I go before the pawnbroker each year,” said Wana. Her most recent visit was to pawn gold earrings for her friend to prepare for the new school year.
Pawnshops are always a popular option for people in hard times as they don’t require documents or explanations — all it takes is an ID card and fingerprints to be given or scanned at the shop. There are two types of pawnshops: state-owned, which are operated under the Ministry of Social Development and Human Security and private-run shops. Regardless of the type, pawnshops are preferable for those who need money, but don’t want to sell their valuables. Many are afraid they won’t be able to find enough cash to buy back high-priced items again should they sell their existing ones, reported Wana.
“With pawning, you can pay back the loan in small instalments. And you get your things back in the end. It solves a lot of problems for us people with lower incomes,” Wana said. “Others may feel embarrassed to go into pawnshops. Some take it as a hit to their pride, but I don’t. It’s not like I’m robbing anyone.”
When clients fail to pay back their loans, their pawned items are displayed at the shop, ready to be sold to interested people.
It’s a given that not many people walk with their heads held high into pawnshops. Food vendor Pongpat Polasit, 45, was also a regular client at pawnshops in his younger years. However, he said he’d never retrace his steps to face the pawnbroker again. Going into pawnshops signified a low point in his life.
“It was stressful to figure out a way to reclaim the pawned item when you barely have money to begin with. I used to feel embarrassed pawning my video player or camera. I met all sorts of shabby people who endure poor living conditions in there and I realised I was no different to them,” said Pongpat. “I hope I don’t end up there again, but you never know.”
By law, clients are given around five months to pay back the loan and reclaim their collateral. If the loan is defaulted on, the items rightfully belong to the pawnshops — and can then be resold or auctioned off to other clients.
The interest rate at public pawnshops are, as of now, 0.25-1.25% per month, depending on the amount being loaned. For private pawnshops, the interest rate is from 1.25-2% per month.
Prices of collateral items named by pawnshops do vary. A full-set DSLR camera which is worth over 20,000 baht, for example, might earn up to 4,000 baht at a private pawnshop while a state-owned shop might just give 2,000 baht at most.
“This stuff is now considered second-hand, and there is never a standardised price — except for gold. Pricing partly depends on the market price and whether the pawnbroker likes the items or not. We also have to consider the value that it can be resold for and how much profit we can gain from it,” explained Kand*, an owner of a pawnshop in Pattaya. He added that he may be willing to give a higher price for regular clients who’re in urgent financial trouble.
Pricing may also depend on location of the shops, Kand said. A shop with a competition nearby may offer a higher price to attract clients.
Pawning facilities — both private and publicly owned — welcome people from all walks of life so long as they possess pawn-able valuables such as gold, jewellery, electronics, mechanical tools and musical instruments. While various kinds of goods are accepted, there are now a few exceptions depending on individual shops. Many now refuse smaller electronics items like smartphones, and even brand-name bags. Forget about pawning your LV or Hermes when the going gets tough.
“Laptops and phones go out of trend easily. After a few months, their prices drop and nobody wants that as it’ll be hard for a resale. It’s easier to just sell the phones, rather than pawning them,” said Prasan, who refused to pawn an iPhone 6. “For bags, there are just too many copycats nowadays. It can be difficult to tell whether it is an original or a copy.”
Gold, as agreed by the pawnbrokers, remains among every pawnshop’s most popular items. A gold ornament (15g), which is worth over 20,000 baht on the market, earns around 16,000 to 17,000 baht. Kand reported that his clients are often those from a lower-class who have limited income. Many of them tend to save up money and buy gold as it can be pawned or sold at a high value whenever they face an emergency.
Aside from the back-to-school seasons, both Kand and Prasan agree that a long holiday period — such as Songkran and New Year — also marks a busy time for pawnshops. Some people would pawn their valuable items to get money for travelling. On the other hand, many also pay back and redeem their items — especially gold and jewellery — before the holiday so they have something to show off to their families and neighbours back home.
“That’s quite a cultural practice for people who came to work in big cities. When they visit their hometown, they need to have gold on them to show that they’re quite wealthy, or else they’d lose face,” said Kand. “It’s just for show, really. After the holiday, the gold always find its way back to our counter.”
Back-to-school time always brings back patrons.
A staff at a state-owned pawnshop shows pawned items.
This source first appeared on Bangkok Post Lifestyle.