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Gold for Cash: Pawning in the Philippines

Pawnshops are a rich part of Philippine history.  Believe it or not, it can be traced back at least 3,000 years to ancient China, and has been found in the earliest written histories of Greek and Roman civilizations. In 1462 the Franciscans set up the montes pietatis, which granted interest-free loans to the poor, though they were later forced to charge interest to prevent premature exhaustion of their funds. Some scholars say that the practice of pawning was introduced during the days of the Spaniards, when they would allow Chinese traders to enter the Philippine shores in order to conduct their business. This practice has then evolved into the pawning practices of today.

Due to the slow economic growth, Filipinos had turned into pawning more frequently than the usual. Is it any wonder that pawnshops continue to grow in numbers? The Bangko Sentral ng Pilipinas (BSP) said the number of pawnshops across the country reached 17,408. Of these, 6,279 are head offices while the remaining 11,129 are branches. Unsurprisingly, they outmatch and outnumber banks, as a matter of fact, they outnumber all other types of financial institutions regulated by the BSP, including universal and commercial banks, rural banks, and savings and loans associations. Talk about a booming business.

Pawning’s Wide Reach

Open your TV and you’re bound to see a commercial regarding pawnshops and its recent services, perhaps you’d be able to spot one or two within the day. In such case, it’s no wonder that pawnshops have entered Philippine pop culture as well, spearheaded by some of today’s sought after actors and actresses, it’s no wonder that the terrestrial reach of pawnshops have been wider than ever, and we haven’t even scratched the surface yet, as this only pertains to television slots, as the social media platforms of pawnshops are hard at work as well when it comes to making their presence felt.

By this, you can probably say that pawnshops no longer indicate a negative vibe whenever it is brought into discussion. There used to be a time when people would raise their eyebrows whenever they would hear of a neighbor or acquaintance pawning off their items. Nowadays, it is common knowledge that pawnshops provide nothing more than a chance for Filipinos to make ends meet. Of course, not everyone is well off, and as mentioned earlier, the Philippine economy has been stagnant, which is why it is very understandable for Filipinos to turn to pawnshops to hopefully get a fair amount.


How do Pawnshops Earn Their Money?

Well, pawnbrokers usually derive income primarily from two or three income streams:

  • Interest and Service Charges on money lent

One pawnbroking website has provided an average percentage regarding this format. We would like to clarify, however, that these percentages may vary, as different pawnshops have different percentages in play:

“In comparison to commercial banks and other lending companies, they get their income from interest for every new loan of 1% to 2.5% monthly, and yet they are all liquid. So it is imperative to say that this financial institution earns at this interest rates, how much more for the Pawnshop business averaging a 5% monthly interest rate on every loan plus a collateral – to secure loan payment.”


  • Profits on sale of unredeemed merchandise

Of course, there are times in which the person pawning off their items would not be able to regain it back to due to limited funds. In such case, it gets sold by the pawnshop. The following is a standardized format for this. Again, percentages may vary among pawnshops:


a) The income earned from this sale is from 70%-100% of mark up from the principal amount loaned out.

b) Mobile Phone units – 70% – 100% Mark up per unit for 60 days.

c) Gold Jewelries – 75% – 100% Mark up per item for 120 days.


  • Profits from ancillary specialty services such as currency exchange, money order sales, and electronic load for mobile phones.

Take note of the phrase “ancillary specialty services.“ Of course, some modern pawnshops do not just deal in pawnbroking, nowadays, they offer various services which tend to the modern Filipino’s needs. Speaking of which..


The Modern Pawnshop: What does it have to offer?

Gone are the days in which pawnshops are solely about pawning off items in exchange for cash. Cebuana Lhuillier, for example, upped its ante and showed a clear evolution into their lineup of services. First established in 1988, it is one of the leading and largest non-bank financial services providers in the Philippines with 2,500 branches nationwide. Here are just a few of its current services:


1) Money Remittance:

Cebuana Lhuillier’s Pera Padala service is an easy, quick, and safe way to send and receive money within and outside the Philippines. With its wide network and client reach with over 1.5 million global touchpoints and 4,000 domestic partner outlets, Cebuana Lhuillier makes money remittance possible anywhere around the world.


2) Microinsurance:

One of Cebuana Lhuillier’s main services, Microinsurance products help Filipinos avail financial services that promise to minimize the impact of distress and misfortune should a disaster or unfavorable event occur. They actually offer more than 20 unique and tailor-fit insurance products, which include but are not limited to TodaCARE, StudentCARE, EmployeeCARE, SecurityCARE, and AutoCARE.


3) Micro Savings:

Cebuana Lhuillier Micro Savings aims to provide easier banking access to Filipinos. The product is almost the same with any regular savings account in the Philippines (except for the fact that it is much convenient and accessible than banks) and doesn’t require a maintaining balance. Filipino citizens as young as 7 years old are even qualified to open an account, which can be considered as a “kids savings” or “junior savings” account.


A Keen Observation:

Perhaps the biggest question is, why do Filipinos tend to look towards pawnshops first than other means of financial support? After all, Filipinos can just easily loan from other institutions or borrow money from their neighbors. Well, the following reasons may very explain this in detail:


1) Accessibility

Pawnshops are all about smooth business flow and transactions. Unlike loaning companies, pawnbrokers take pride in providing a good service and fair appraisal.


2) Strictly Business

Borrowing from people you know, such as relatives, neighbors, workmates, etc. may breed some personal animosity when it comes to financials, especially as everyone would like to protect their savings, hence, why people are more comfortable dealing with pawnbrokers, because it’s all business. Nothing more, nothing less.


3) No Credit Investigations

Lending companies tend to overdo their investigations most of the time. People do not want to be bothered with questions when they’re desperate for cash, hence, why people prefer pawnshops, not because they’re less strict, but rather, they’re efficiently faster when processing financial matters. No need for additional checks or restrictions.


With all of that being said, you may be looking for a pawn shop that would provide you with the most honest service and highest appraisal possible. No worries, as Cebuana Lhuillier has got your back. With their Pawning Service you can never go short in any amount, as they accept an array of items, from jewelry to gadgets, as collaterals. They also lead the pawning industry by offering safety and the highest appraisal rate in the industry in its more than  2,500 branches nationwide. Visit your nearest Cebuana Lhuillier branch now – we assure a fast, easy and secure transaction.