Sometimes we find ourselves stuck in sticky situations where instant cash is needed. Pawning your items of value can be a simple solution to getting you instant cash in your hand fast.
Maybe you’ve stumbled across a bargain and need pay for it right now (or you might need to raise a deposit for it right now) – you can get a bank loan later. Or maybe you have unexpected legal or medical bills that need to be paid immediately. Pawning, is a simple fix for your instant cash needs. It’s a centuries-old service that offers secured loans to people, using items of value ‘assets’ as collateral. You can pawn your item of value for instant cash and get it back when you’re in a better financial position.
Here is how it works:
- You must have attained at least 18+ years of age;
- Bring in your item of value (the pawn) to the pawnbroker;
- The pawnbroker values the item;
- If you agree with this value, the pawnbroker will provide you with a secured loan at the value of your pawned item;
- The pawnbroker will keep your item (safe and secured) as collateral. If you don’t pay your loan back, they have the right to sell this item;
- Once you pay your loan back, you get your item back.
Benefits of Pawnbroking
- If you have a poor credit rating it might be easier to borrow from a pawnbroker than another lender, for example there are no credit checks.
- It’s quick – normally you will have your money the same day.
- A pawnbroker should let you redeem your goods at any time and only charge interest for the period you have borrowed the money.
- If the item is sold and there is a shortfall, the pawnbroker will usually not pursue you for this (but check whether that will be the case).
Like any loan, pawnbroking loans involve interest rates. Of course, the more valuable the item, the more instant cash you will get in return, however, as a general rule the riskier the item (if it has a lesser market in the event the item has to be sold to cover your pawn-debt) the higher the interest rate. Prior to agreement, carefully read your pawnbroking contract to identify the interest rate on your loan and consider whether this is something that you are capable of repaying.
More about Pawnbrokers
A licenced pawnbroker can loan you money in exchange for goods. Your pawned goods become security for the loan repayment. If you do not repay the loan, interest and any other fees and charges in the specified time, the pawnbroker can sell your goods.
By law, in New South Wales, both pawnbrokers and second-hand dealers must hold a licence issued by NSW Fair Trading. In New South Wales, pawnbrokers are required to be licenced under the ‘Pawnbrokers and Second-hand Dealers Act 1996‘ >>
Similar legislation exists for the licencing of pawnbrokers in each of the States and Territories of Australia.
The following explains:
- Pawning Goods:
- Redeeming Goods:
- Stolen Goods:
- Your Consumer Rights:
1. Pawning agreement
If you pawn any of your goods you will enter into a contract known as a ‘pawn agreement’. Before you can enter into a pawn agreement, you need to provide certain information to the pawnbroker. This includes:
- evidence that you own the goods you are offering for sale or pawn
- a detailed description of the goods.
You must submit this information in writing, using the form the pawnbroker gives you. This is known as Form 1 – Customer ownership statement of goods owned or pawned.
The information you provide must be legible.
If you are a representative selling or pawning goods on behalf of the owner, you’ll need authentic evidence from the owner that you can legally act on their behalf.
2. Pawn ticket
Once you complete a Form 1 and pawn your goods, the pawnbroker will issue you with a pawn ticket. This is a receipt of your pawn agreement. Hold onto it so you can claim your goods back after repaying the loan.
A pawn ticket must include the following information:
- a description of the goods
- redeeming goods:
- any serial numbers or other identifying numbers and any hallmark, inscription or engraving of every component
- the total amount lent on the goods
- the rate of interest charged and the period of the loan
- any other charges
- an equivalent annual interest rate
- the name, residential address and date of birth of the owner of the goods and any agent through whom they were pawned
- the date the agreement was signed.
3. Compulsory notices
The following notices must accompany a pawn ticket:
a. A notice about fees and charges specifying:
- fees and charges that are (or may become) payable, including those that are (or may become) deductible from the proceeds of the sale of the goods
- the amount of the fees and charges (so far as they are known)
- how the fees and charges will be calculated (if the amounts are not known)
b. A notice regarding interest charges that states:
- that the pawner has the option of paying interest monthly if the interest period is going to be greater than a month
- the agreed frequency of interest charges and when they are payable (for example, on a Friday or on the 20th of the month)
c. A notice about the redemption (return upon repayment) of pawned goods specifying the following:
- the method(s) by which goods will be sold if they are not redeemed
- whether goods can be redeemed separately if the pawn ticket covers more than one item
- the address of the premises where the goods will be held during the redemption period
- the date the redemption period ends
d. A notice about the pawner’s rights and obligations. This notice is called Form 2: Notice of the rights and obligations of a pawner.
Return to the pawnbroker with your pawn ticket and ask to see the licensee of the business.
If you don’t have your pawn ticket, you can still redeem your goods by showing evidence of your identity and completing a declaration that you are the owner of the goods.
You can allocate a representative to collect the goods on your behalf, but you must give them authority in writing. They can also produce some other evidence, such as a death certificate, to show that the owner is unable to sign an authority and can’t redeem the goods themselves.
1. Redemption period
Generally, you must redeem your goods within three months from the date they were pawned. However, you may be able to negotiate a longer period with the pawnbroker. If you do, make sure you get any extensions in writing.
Once the redemption period is finished, you can still redeem your goods at any time until they are either sold or consigned for auction.
If there has been no agreement to extend the redemption period and you want to redeem your goods because they haven’t been sold or consigned for auction, the pawnbroker cannot charge you interest for the time after the end of the redemption period.
The pawnbroker can charge a safekeeping fee as long as it’s not greater after the end of the redemption period than it was during.
Extending the redemption period
You and the pawnbroker can agree to extend the redemption period even if the original redemption period has expired. This can also be done by someone who is entitled to redeem the goods, or you can authorise a person on your behalf.
The pawnbroker must make a record of the agreement and provide you with a copy. The agreement must:
- include an identifying reference to the original agreement which must be attached or incorporated in it
- include the new redemption period
- include the date the extending agreement was entered into
- specify any new or varied rates, fees or charges
- be signed by the pawner or the person extending the agreement for the pawner.
2. If the pawnbroker does not return the goods
If the pawnbroker does not return the goods, you can go to the local Police and complain as the pawnbroker is in breach of the Pawnbrokers and Second-hand Dealers Act 1996. This will usually involve court action.
You can also make a claim with the NSW Civil and Administrative Tribunal. You’ll need some proof of the value of the goods.
3. Unredeemed goods
If you are lent more than $100 for the goods and fail to repay your loan in the redemption period, the pawnbroker can sell the goods. This could be either off-the-shelf in their premises, at auction in their premises, or at auction elsewhere.
Pawnbrokers are not entitled to make a profit in excess of the loan, reasonable costs (storage is common but may include others) and interest.
If the goods sell for $50 more than the amount owed, the pawnbroker must send you a letter by registered mail (to the address supplied on the pawn ticket) advising that you have 12 months to claim the excess money (made from the sale) or it is forfeit.
Who has title to stolen goods?
Title and ownership of the goods remains with the owner that had the goods stolen or sold without their permission. The buyer of stolen goods does not get title nor ownership of the goods.
Report stolen goods to the Police
If you believe a pawnbroker or second-hand dealer has goods that were stolen from you, you should inform both the pawnbroker and the Police.
The pawnbroker is required to advise you to go to a Police station. They should also have a sign on display with this information.
Provide evidence or a statutory declaration
Once you have reported the theft or unlawful dealings of your goods to the Police, you must provide them with evidence that you owned the goods or a make a statutory declaration that the goods are yours.
If the Police Officer has no reason to suspect that the documents or statements are false or misleading, they can serve the pawnbroker with a Restoration Notice.
Once they are served, the pawnbroker has 28 days to either return the goods to you or lodge an application to have the matter resolved by the NSW Civil and Administrative Tribunal.
The pawnbroker must hold onto the goods until the matter is resolved.
If criminal proceedings (in relation to the theft of the goods) begin, the Police will notify the pawnbroker and they will hold onto the goods. If no decision is made about ownership during those proceedings, the 28-day period will begin after the proceedings end.
Your Consumer Rights
All persons purchasing goods or services are protected by Australian Consumer Law.
The following agencies enforce provisions relating to consumer goods and services:
- Australian Competition and Consumer Commission (ACCC)
- include the new redemption period
- NSW Fair Trading, and
- other State and Territory consumer protection agencies.
To find out more about the rules and regulations under which Pawnbrokers and Second hand-dealers operate and are bound in New South Wales please click here >>
Can’t find the information you’re looking for? You can call NSW Fair Trading on 13 32 20 or you can submit an submit an online enquiry >>
Need to know more? – Let’s Talk 0418 225 372
U-Pawn is a high-value collateral lender specialising in pawning Cars | Motorcycles | Boats and Trucks. From time to time we also pawn Heavy Machinery | Recreational Vehicles | Caravans |Trailers | Farm Equipment and even Aircraft.