Many people find pawnshops the perfect way to cover their betting losses, and those shops in Ho Chi Minh City have since been bombarded with customers despite being charged more interest than usual.

Low loan, high interest rate

As the final matches of the World Cup are drawing closer with anticipation, many have been pawning their goods to cover their betting losses and the number of customers who turn up at pawnshops in Ho Chi Minh City are also increasing by huge numbers. Pawnshops are filled with motorbikes, TVs, laptops and various other items stacked up anywhere there is space and the amount of stuff keeps rising by the hour. Because the number of people coming to pawn off their stuff at these shops is so overwhelming, pawnbrokers determine the loan amounts as they wish and freely bargain with customers. If somebody complains that the the interest rate is too high, they will immediately be refused by the pawnshop owner.

Bargaining over items at a pawnshop.

Common characteristics of these pawnshops are to lend very small amounts of money to customers, while taking a high interest on the pawned items over a short period of time. Bargaining is unavoidable, but the pawnbrokers always win over their customers.

At a pawnshop near Phan Van Tri Market in Go Vap District, on June 28, there were 5 young people, some sitting, some standing, all waiting for their turn. Sitting at the transaction desk, a young man with ruffled hair and a seemingly tired face, tried to haggle with a pawnbroker, “This laptop I bought at VND 15 million (USD 782), why am I only receiving a VND 3 million (USD 156) loan amount?” Turning the laptop around to have a closer look, the pawnshop owner said with a sneer, “Is that the original price of 5 years ago? Can you now sell this laptop for VND 4 million (USD 208)? I can only give you a loan of VND 3 million with an interest rate of VND 20,000 (USD 1) for every million per day. You have 25 days.”

The young man showed a terrifying look on his face, “Can you please extend it a bit longer for me? I’m afraid I won’t be able to pay you back in such a short period of time!” The pawnshop owner replied, “25 days of interest already makes the amount you’ll have to pay nearly VND 4.5 million already. The longer the period, the harder it is for you to pay me back.” The young man gave a big sigh before taking the receipt.

The next young man, named Hoan, wanted to pawn his Ware RS motorbike, but the pawnshop owner immediately shook her head, “We don’t want to keep any more motorbikes. You see, there’s no more space here.” Hoan started to tell the pawnbroker in detail about his personal circumstances and that if he did not have the money, he would be in deep trouble. Hearing that, the pawnshop owner said with sympathy, “Okay, I’m only doing this out of consideration for you! I’ll lend you VND 3 million, and the interest rate is VND 25,000 (USD 1.3) for every million per day. If you’re ok with that, I’ll write you a receipt now.”

Despite being charged with such a high interest, Hoan had no choice but to accept it, “I had already visited some other pawnshops, and few places would take motorbikes. Normally, I would be able to pawn this motorbike of mine for VND 5 million (USD 260), and the interest would only be VND 15,000 (USD 80 cents) for each million per day.”

The pawnshop owner then asked her staff to greet other customers, while she left to sit in the front of the shop drinking tea. She said, “I have to reduce the loan amounts in order to keep my capital. I now charge the pawned items with a much higher interest, but sometimes I don’t even want to take in their items because of my limited storage space. If they can’t pay me back on time, I will sell them straight away.”

Desperate customers still turned away

Despite the high rate of interest, many pawnbrokers can’t deal with the amount of items being pawned at their shop, as the demand has suddenly increased during this World Cup season. Now, as soon as the items are brought to the shop, the owners immediately either accept or refuse it to save time. Motorbikes are the things that people are most likely to pawn, but are often refused because of limited space. Other items are now being checked more carefully in regards to their quality and value.

Pointing at the rows of about 20 motorbikes from Ware, Air Blade, Novo to SH, owner of C. pawnshop on Nguyen Van Dau Street, Phu Nhuan District, said that his shop has stopped taking in motorbikes since the beginning of the previous week.

“Charging high interest over pawned items is not always the best thing to do. There is a limit to whatever investment there may be. I have invested a total of VND 1.5 billion (USD 78,253) for my business this season, so I have to check carefully the items that I’m taking in. Holding people’s land-use rights certificate is what I like the most,” this pawnshop owner added.

Many students had come and brought with them their laptops and cameras, hoping to pawn these items at the shop, but the owner said he had recommended them not to pawn, but sell them to avoid money loss. They wouldn’t be able to get their items back with the pawning interest rate this high, he said.

A number of illegal pawnshops have taken this opportunity to open as to meet the demand of customers, and become the place favoured by gamblers who needed money to pay for their losses.

N.H., a graduate of Water Resources University, told us that after unsuccessful attempts trying to pawn his Air Blade motorbike at different shops, he decided to come to an illegal pawnshop on Pham Van Hai Road. “The interest is much the same here, but they don’t require you to show bike registration papers, so it’s actually a very popular choice for students,” H. said.