As unbureaucratic as the seizure of valuables is, it is often expensive for those affected. Because the costs are made up of two different factors, which are, however, capped by law:
Interest: The legislator stipulates that the mortgage loan costs per month may amount to a maximum of one percent of the loan amount.
Fees: In addition, the pawnshop may charge separate fees that are charged, among other things, for the valuation and safekeeping of the pledge. The monthly remuneration depends on the value of the pledged item.
If the loan granted exceeds an amount of 300 euros for instance, the pawnshop and customer can freely negotiate the monthly remuneration. Additional costs can always arise if the pledged items’ safekeeping, insurance, or maintenance requires special expenses. This is the case, for example, when motor vehicles or bicycles are charged with an auxiliary motor. The monthly custody costs can increase because the pawnbroker has to check and maintain the engines regularly. Click here (คลิกที่นี่ which is the term in Thai) to know more about pawn loan.
Extremely High Annual Interest Rate
A pawn loan’s effective annual interest rate is higher than any other loan type. Depending on the value of the pledged item and the loan amount paid out, the interest rates fluctuate between 30 and 50 percent. This is by no means usury because the effective annual interest for the borrower consists of the pure interest payments (max. One percent per month) and the additional costs for the safekeeping of the pledge.
Repayment Of The Loan
As a borrower, you are, of course, obliged to pay off the borrowed money in full, including the fees. If this does not happen, the pawnbroker may sell the goods one month after the deadline. He is even obliged to sell it no later than five months afterward.
In contrast to a conventional loan agreement, you do not face any direct consequences from failing to repay. The pledge serves as complete loan security; the pawnshop will not remind you in the conventional sense but only draw your attention to the fact that the deadline for the loan repayment is about to expire.