The following can only be a brief introduction of the legal subject concerned. Before you take any action which may have legal consequence, you should first seek advice from your own lawyer or make an appointment at any District Office to see a volunteer lawyer of the Free Legal Advice Scheme.




(505) BORROWING MONEY (3) - PAWNBROKERS AND CREDIT UNIONS

Voice

There are many ways of borrowing cash or getting credit for the things you want to buy and there are 4 recordings to deal with this topic.

(This recording deals with pawnbrokers and credit union)

Pawnbrokers lend money on the security of valuable goods. The great danger with pawnbrokers is that if the borrower does not repay the loan and interest within a set time, the goods become the property of the pawnbroker. Borrowers are protected by law where the loan does not exceed $100,000. The time limit for reclaiming the goods is four lunar months.

Pawnbrokers must also be registered and follow certain legal regulations. They must issue a receipt for the goods they hold as security. Pawnbrokers must also take care of the pawned goods and compensate the borrower for loss or damage caused by neglect.

Pawnbrokers may only charge simple interest and may not charge more than the maximum interest rate provided by the law. No other charges are allowed. The currently interest rate per lunar month is 3.5%. Although the monthly interest rate may not sound high, it is high when calculated over one year.

For example, the total interest after 4 months on a loan of $10,000 secured by a pawned watch is $1,400. This works out at a yearly interest rate of 39%.

Complains about pawnbrokers should be made to the Police.

Credit unions are a kind of company whose members all have a common occupation, employment, social connections, or even people who reside together in a certain area. The purpose of the union is to make loans only to its members and only if they need the money for productive purposes, or for making some wise provision for the future. The purposes for which the loans are make will vary according to the objectives of each credit union.

The size of loans made by credit unions is limited and depends on the capital and funds of each union. The maximum interest rate on any loan is 1% per month, which includes all other credit charges which may be levied.

Date of amendment: 11th October 2023