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While the loan may be easy to obtain thanks to waiving affordability checks, you do have to repay the loan within 30 days. There are interest and fees, too. For items under R1 000, Pawn Express will charge you a 15% initiation fee plus VAT, plus 5% interest.
For example: If you bring in a necklace and ask to borrow R1 000, you will pay a R171 initiation fee (15% plus VAT on R1 000) plus R50 (5% of R1 000). You will then be obligated to pay back R1 221 after 30 days.
If you want to borrow more than R1 000, you pay an initiation fee of R150 on the first R1 000, 10% on the balance, VAT and 5% interest.
So, if you bring in your expensive watch and Pawn Express lends you R5 000, you pay R171 (initiation fee, plus VAT on the first R1 000) plus R456 (10% initiation fee plus VAT on the remaining R4 000) plus R250 (5% interest). This means you end up paying back R5 877 after 30 days.
While this doesn’t sound like a lot of money, bear in mind that you can use your credit card to draw cash or to pay for items and you generally get between 55 and 57 days from banks to pay off the card without paying any interest.
So, if you need to borrow money over the short term, using your credit card will still be cheaper, provided that you pay back the money before the interest charges kick in.
If you start getting into difficulty and cannot afford to repay the loan, Pawn Express says it is possible to enter into a new agreement with the store that you transacted with twice more before you have to collect the item and repay. This will again require that interest charges be paid to the store before entering into a new agreement.
When City Press put this before the NCR, it had issues with this policy. “The main concern we have with this policy is that consumers will be charged twice for initiation fees.
“If Pawn Express wishes to extend the term of the pawn contract, they must do so without expecting consumers to conclude a new agreement and to pay initiation fees again,” says Magolego.
What’s more, if you don’t pay back the loan and don’t make contact with Pawn Express regarding your situation, they will have the right to place the item you offered as collateral on the store’s retail floor for sale.
So, if the item you’re putting up for security is of great value to you or a necessity for work, like a laptop, then you should think twice before engaging in this sort of deal.