Differences from purchasing

The biggest feature of pawn loans is that you can get your items back. If you sell your items, you would have to buy the same item again if you want it back. However, with pawn loans, you can retrieve your items by paying back the principal amount and interest initially provided. This is certainly cheaper than buying a new item, and since your items are securely stored in our pawnshop warehouse, you don’t have to worry about them being out of stock.

However, if you need “as much money as possible,” selling your items is recommended. There is a difference in the appraisal amount between selling and pawn loans, with selling generally yielding a slightly higher amount. The reason for this difference is the time lag between the appraisal and the date when the pawned item becomes the property of the shop. This transfer of ownership, known as “pawn default,” occurs if the loan is not repaid within a minimum of three months. This time gap, during which market value fluctuations are considered, results in a difference in the amounts offered.

Therefore,

If you do not plan to retrieve the item
If you want to sell it for the highest possible price
selling your items might be the better option for you.

Advantages and disadvantages of pawn loans

Let me explain the advantages and disadvantages of pawn loans.

Advantages of Pawn Loans
Quick Access to Cash
When borrowing money from financial institutions, the approval process can take time. However, with pawn loans, items are appraised similarly to selling them, so you can receive a loan in about 5 to 10 minutes per item (including paperwork, it takes around 15 to 20 minutes). Please note that some items may take half a day to several days to appraise.

No Repayment Obligation
There is no repayment obligation with pawn loans. If you find it difficult to repay the loan, you can choose to relinquish ownership of the pawned item. In this case, the item becomes the property of the pawnshop (pawn default), and you are no longer required to repay the loan.
Note: Items that go into pawn default cannot be returned to you.

No Impact on Credit Score
Borrowing money through pawn loans does not affect your credit score. Whether you currently have a pawn loan or have defaulted in the past, it does not impact your credit information. This means that even if you plan to take out a loan for a car or house in the future, you can use pawn loans without worry. Additionally, since pawn loans are based on the appraisal of your items and use them as collateral, your borrowing history is irrelevant.

Disadvantages of Pawn Loans
Requires an Item for Collateral
The main disadvantage of pawn loans is that you need an item to borrow money. Additionally, because the loan amount is based on the appraised value of the item, you may not always be able to borrow the exact amount you need.

Lower Amount than Selling
As mentioned earlier, selling an item usually offers a higher amount than pawn loans. If you want to get the highest amount possible, selling might be a better option than pawning.

Interest Charges
When retrieving a pawned item, you need to repay the principal amount plus interest. Frankly, the interest on pawn loans is higher than borrowing from financial institutions. This is because, due to the nature of pawn loans, we take great care in storing your valuable items. We individually pack items and store them in a secure, temperature- and humidity-controlled warehouse that meets public safety standards. The interest on pawn loans also covers the costs of storing and managing these items, which is why the interest rate is higher.

How to retrieve your item?

Let me explain how to retrieve your items with pawn loans.

First, you must come to the store in person to retrieve your pawned items. We cannot return the items to anyone other than the person who originally pawned them, even if they are family members.

To retrieve your items, you need to pay back the principal amount and the interest. Interest is charged on a monthly basis, and for loans under 100,000 yen, the interest rate is 9% per month.

Example:

For a pawn loan of 80,000 yen:
If you retrieve it within one month: 80,000 yen + 7,200 yen = 87,200 yen
If you retrieve it within one to two months: 80,000 yen + 14,400 yen = 94,400 yen
If you retrieve it within two to three months: 80,000 yen + 21,600 yen = 101,600 yen
You can retrieve your items once your identity is confirmed and the payment is completed.

Options for not retrieving your item and how to extend the deadline

As mentioned in the advantages of pawn loans…

With pawn loans, you are not obligated to repay the money!

Since you are borrowing money using your items as collateral, if you find it difficult to repay or no longer need the items, you can simply leave them. The items will become pawn defaults, meaning their ownership will transfer from you to the shop, and you will no longer need to repay the loan. However, please note that once an item becomes a pawn default, it cannot be returned to you.

An item becomes a pawn default three months after the pawn loan date. For example, if you take out a pawn loan on June 18, the item will become a pawn default on September 18. The shop will not notify you when the deadline is approaching, so if you plan to retrieve your items, please make sure not to forget the deadline.

If the deadline is approaching and you don’t have enough money but don’t want to give up your items, you can use the option to “extend” the pawn default deadline. To extend the deadline, you only need to pay the interest. Paying one month’s interest extends the deadline by one month, paying two months’ interest extends it by two months, and so on. Extensions can be made at any time before the original deadline.

In case you planned to extend the deadline on the last day but an emergency prevents you from coming to the store, it’s advisable to visit with some time to spare. You can also extend the deadline multiple times, allowing you to keep the pawn loan until you can gather the necessary funds. If, after an extension, you realize you can’t repay the loan and decide to relinquish the item, you can stop paying the interest (extension), and the item will become a pawn default on the new deadline. This way, you are not forced to continue paying the interest.

However, as mentioned in the disadvantages of pawn loans, the interest rates are not low, so we do not recommend using this option for an extended period. If it seems unlikely that you will be able to retrieve your items, it might be best to consider relinquishing them.