AS poor economic conditions prevail in the country, the low- and middle-income earners who are most affected are hocking their valuables to make ends meet.

Since time immemorial, the pawnbroker has been a quick and easy way to get one’s hands of some sorely needed cash – provided one has valuables worth selling.

Unlike the bank, the pawnbroker dispenses the cash without first running a credit check and asking for proof of employment and income.

For taxi driver R. Segar, 49, it has been necessary to pawn the family gold jewellery to make the monthly repayments on his housing loan.

“The taxi business is not doing too well and my biggest worry is paying my housing instalments.

“I have started taking renovation jobs to make more money, but that isn’t not enough,” Segar, who lives in Ampang, told The Malaysian Insight.

Segar said he also sometimes pawned his wife’s jewellery to pay for the children’s schooling expenses.

He has three children aged eight, 13 and 15.

“If my children need school supplies like textbooks and other items then I will have to look for quick cash. The easiest way is to pawn the jewellery.”

Segar said he has close to RM20,000 worth of items in hock.

Shukri Abdul Latiff, 37 who works for a caterer, said he had not been able to make extra money from overtime work because business had been slow.

“We have not been getting a lot of catering jobs. My overtime has also been cut so, if I need some emergency cash, I will have to visit the pawnshop,” he said.

Shukri, who lives in Kajang, said he last visited one the week before Hari Raya.

“I needed money for the Raya celebrations. I had to buy new clothes for my three children and also to give out duit raya. It is difficult when we don’t have money for Raya.”

Shukri said housing and car loan repayments were another reason to go to the pawnbroker.

“I used to go to the conventional pawnshops but I have switched to Ar Rahnu (Islamic pawnbroker) which is under Bank Rakyat. Here the deal is much better and charges are lower,” he said.

Price of going into hock

Regular pawnbrokers charge a monthly interest of 2% while Ar Rahnu pawnbrokers charge a monthly fee of 65 sen for every RM100 worth of gold pawned, up to RM1,000, and 75 sen for each RM100 worth of gold thereafter.

The pawnbrokers will also auction off the pawned items that are not collected after six months, but Ar Rahnu will keep the items up to 18 months. Moreover, if the item is still uncollected at the end of the period, Ar Rahnu will auction off the items and return the extra cash to the customer if the items fetch a sum higher than the sum borrowed.

But even with more people turning to Ar Rahnu, the regular pawnbroker is enjoying 20% more business now than three years ago.

According to the Housing and Local Government Ministry (KPKT), Malaysia had 438 pawn shops in 2015 and 492 pawnshops as of July.

From 2014 to last year, KPKT received 179 and approved 105 applications to open a pawnshops.

Selangor has the highest number of pawnshops with 113, followed by Johor (68), Perak (50), Kedah (44) and Penang (41).

KPKT said 23 pawnshops were under investigation for offences such as not violation of advertising regulations, lack of a permit, and non-submission of the yearly transaction report. – August 5, 2017.