Sangla 101: All you need to know about Pawn Loans in the Philippines

Last Updated – Nov 18, 2022 @ 5:54 pm

We’ve all been there – all your bills have been sorted out and you just have enough money for food until your next paycheck. Then, life happens.

You may need to go to the doctor for an unexpected visit, you may need to repair your car, or your kid may need money to pay for something in school. When these things happen and you ruin your budget, you can run to the nearest pawnshop for fast cash.

For many decades, millions of Filipinos have turned to this type of loan, especially those who do not have immediate access to bank loans or credit cards.  

But what is Sangla and how does it work? This guide will help you understand what it is.

What is Sangla or Pawn?

With most households earning less than P500 a day, getting by becomes harder, especially since these people do not have access to traditional banks for emergency loans. This is where pawn shops come into play. 

Pawnshops are a popular way to easily borrow money. With more than 18,000 pawnshops in the country today, these establishments serve three-quarters of the adult population.

Pawnshops are not something new. It first began in China more than 3,000 years ago. Back then, peasants would hand over their belongings in exchange for a loan, mostly the clothes on their backs. For those who couldn’t pay the loan, their items would be forfeited. In many ways, the way pawnshops work today is still the same 3,000 years after it was born. 

Despite its undeniable importance in society, pawnshops get a lot of bad rep. However, turning to pawnshops can actually be a smart move in many instances such as:

  • When you need cash fast
  • When you only need a small amount of money
  • When you’re okay with losing your item of value 

That said, if you need money, applying for a loan through traditional sources is still recommended to help you build credit. 

When it comes to borrowing money, you typically have a number of options. But how do you decide which is best for you? 


Sangla vs. Personal Loan: Which should you choose?

Personal loans and pawnshop loans are two of the most popular choices in the Philippines. The major thing that sets the two apart is their accessibility to everyone.

Applying for a personal loan in a bank is more complicated because you need to meet certain requirements to get the amount of money you want to borrow. 

Meanwhile, pawnshops do not need any membership. The process of borrowing money through pawnshops isn’t even complicated.

As long as you have something that is worth the money you want to borrow, you’re all set.

But how do you know which of the two types of loan you should use?

Bank loans are great if you need a larger amount of money. But since bank loans usually take a couple of days to get approved, a pawn loan is a better choice if you need money fast.

Therefore, it’s great for emergencies


Sangla vs. Salary Advance: Which should you choose?

Choosing between sangla and salary advance is a hard decision. But if your company approves salary advance requests, you should get one.

Salary advances are actually one of the safest ways to borrow money because your employer is the one lending you money. 

That said, salary advance also has its own drawbacks. Since the money you get will be subtracted from your salary at the end of the month, you may end up in a cycle of debt.

If you’re planning to borrow money for a vacation or a big purchase, a salary advance is not for you since you may  end up with no money at the end of the month. 

Related: Best Salary Loans in the Philippines


Sangla vs. P2P Loan: Which should you choose?

Another type of loan that is gaining popularity in the Philippines is peer-to-peer loan. A P2P loan is a type of loan where you get money from another individual without the help of a bank.

While this type of loan is extremely beneficial, it would require you to pitch an idea for the loan which could take time. They are, however, a great option if you need a large amount of money.


Pros and Cons of Sangla (Pawn Loan)

To help you get a clearer picture of whether or not a pawn loan is best for you, here are its advantages and disadvantages.

Pros

Quick funding

If you are in a situation where you need money, you’d want relief fast. Pawnshops can help you get money in as little as 5 minutes.

While you can get a personal loan from a bank, it could take a couple of days before you leave the bank with your money. In terms of speed, it’s a no-brainer which is better.

No need for a credit check

If you get a personal loan from a bank, your credit report will be checked. If you have a low credit score, you might not be able to get the amount of money you want to borrow.

Meanwhile, pawnshops do not check credit reports and will only ask for your identification card.

Safer than informal lenders

Sometimes, you have no choice but to borrow money from an informal lender for a very huge amount.

Unfortunately, informal lenders can be very dangerous and can sometimes even charge so much. Since pawn shops are regulated by the government, it’s safe to get a loan from them.

Pawnshops won’t hound you if you don’t pay

The biggest advantage of getting a loan from pawnshops is that you don’t have to worry about getting harassed by loan collectors. If you don’t pay the money you owe, pawnshops will not be going after you and will let your debt go to the backburner.

However, when you start missing payments to your bank, the bank will not hesitate to send their collection agents to your house. If you get an informal loan, you may even end up in danger.

It is more accessible

Pawnshops can easily be found in almost every city and municipality. This makes them a better option for people who cannot go to the bank for loans.

Pawnshops are also a godsend for Filipinos who do not have the luxury of time and money to open bank accounts

Easier to get multiple loans

While you can also access multiple loans from banks, it gets harder every time you apply for another loan. However, pawnshops give you the freedom to take out several loans at the same time. 

No tiresome paperwork

When you apply for a personal loan, you need to prepare yourself for a lot of paperwork.

When you apply for a pawnshop loan, you only need to show your ID and let them see the item you’re pawning. Literally, that’s it.

No complicated forms and no long lines.

Cons

It doesn’t build your credit score

Pawnshops work differently and do not show up in your credit report. This can be a deal-breaker for people who want to build their credit score so they can apply for bigger loans in the future. 

It can get expensive

Pawnshops are notorious for their exorbitant interest rates. Considering this, it’s crucial to make sure you only borrow the amount you need unless you’re sure that you can pay it back.

Aside from that, pawnshops are also known for appraising items lower than their market price. 

Loan amount is limited

Compared to banks and other institutions, you can only borrow a limited amount of money from pawnshops.

If you are planning to buy a big-ticket item such as a house, a car, or a business, getting a pawnshop loan may not be enough to shoulder your needs. 

They may ask for additional documents

Pawnshops are a very open and honest business. However, they can also be a little stringent when they are approving your collateral and approving the loan amount.

Sometimes, they may ask for additional documents to see if the item you’re asking for is authentic.

You can lose your collateral

If you cannot pay back your loan, pawnshops will get your deposit in exchange for your item.

This can be devastating especially if you are planning to use that item for future investment, or if the item has a sentimental value. 


Types of Items You Can Pawn in the Philippines

Here are the different types of items you can pawn in the Philippines. Take note that this usually depends on your pawnshop of choice. 

Jewelry

While it may be the most obvious, jewelry is actually one of the most popular items you can get a pawnshop loan for. This makes a lot of sense considering most Filipinos love investing in gold.

Technically speaking, any precious metal can be considered jewelry. This includes platinum, gold, and silver.

You can also pawn jewelry with precious stones. Some of the most popular jewelry items you can use as a pawn include:

  • Wedding rings
  • Earrings
  • Necklaces

Designer bags

Designer bags are one of the most popular things you can use as collateral since these items can be pricey and at the same time difficult to get.

You can even pawn your bag for a couple of days and go about your business. Upon returning to the pawnshop to pay back your loan, you can get it back and enjoy your purse. Some brands pawnshops accept include:

  • Hermes
  • Louis Vuitton
  • Coach
  • Prada

Aside from bags, many pawnshops also accept designer items such as:

  • Sunglasses
  • Belts
  • Shoes

Watches

Watches are another popular item in pawnshops. This is especially true if the watch is made with precious metal or has some stone attached to it.

When pawning a watch, you have to be careful about the brand. If your watch is not recognized by pawnshops, you will not be able to get the money you want. Some watch brands that can be pawned for a huge amount are:

  • Rolex
  • Patek Philippe
  • Omega 
  • Fossil
  • Tissot
  • Cartier
  • Bulgari

Gadgets 

Gadgets are also good collateral for a pawnshop. This is especially true if the price of your gadget is beyond the amount you need. 

There’s a growing list of gadgets you can use as collateral. If you’re planning to get a loan for a gadget, make sure that the item is a new model, and is in good condition. Some gadgets you can pawn include:

  • Cameras
  • Tablets
  • Smartphones
  • Laptops

Electronics

If you’re planning to get a loan for an electronic item, make sure it’s in good condition and that you have the receipt. Some of the most popular electronic items you can use as pawns are:

  • Television
  • Speakers and sound consoles
  • Gaming consoles

Land title

If you own a piece of land, you can use it to get a loan. Just make sure you have the title and the deed to the land so you can use them as collateral.

This type of pawn also takes more time to process. 

Artworks

Pawnshops usually accept artworks as a pawn. Just make sure that the artwork is original.

You also have to prove that the artwork is yours by presenting the receipts of your purchase or other legal documents.


How Much Interest Does a Pawn Shop Charge on a Loan?

Pawnshop interest rates can vary from one shop to another. However, it is important to note that pawnshop interest rates are much higher than bank interest rates.

Considering this, it is crucial to be sure that you can pay back your loan.

To get an idea of how much money you need to pay back when you take out a loan in a pawnshop, check this table:

PawnshopInterest rate (per month)Service feeAccepted itemsDuration of loan
M Lhuillier3% (no advance interest)1% of principal loan (will not exceed P5)Gold and Diamond JewelryCellular PhonesLaptops/MacbooksTablets/IpadsCamerasKitchenwareSilverwareHome AppliancesCookwareRay-Ban SunglassesPower ToolsGuitarsMedical EquipmentBicycleNintendoSewing MachineWatchesMotorcycle (selected branches nationwide)CarMaximum of 36 months
Cebuana LhuillierStarts at 4% for pawning, 5% for gadget, advanced interest of P4 for every P100 loan amount Renewed loans: starts at 4% plus 2% liquidated damages1% of principal loan amount (not exceeding P5) Renewed loans: P5 service charge·   Gold·   Diamond·   Platinum jewelry and watches·   Cellphones·   Laptop computers·   Minimum 90 days upon maturity, and maximum 4 months 
Palawan Pawnshop1% – 3.5% per months depending on package 1% of the principal loan, but not exceeding PHP 5  Renewal fee of P15Only gold jewelry items 0 to 120 days
Tambunting Pawnshop4%n/aJewelryGadgetsAppliancesMotorcyclesCarsTitled properties6 months maximum term
Villarica Pawnshop4% (with advance interest) n/aDiamond, gold, platinum pieces of jewelryGadgetsWatches 4 months maximum term
PawnHero2.99% or P500, whichever is higher for jewelry 4.5% or P500, whichever is higher for other items  1% of the principal loan but not exceeding P5 JewelryDesigner BagsDesigner shoesWatchesLaptopsGaming ConsolesCameras.SmartphonesTabletsSoundboards and speakersBeltsTVssunglasses3 months maximum term 1 month maximum term electronic gadgets (no renewal)


What Happens if You Don’t Claim or Pay Your Pawned Item?

Pawnshop loans are easy to access if you have the right collateral. However, a lot of people get confused with the terms of their loans.

With that in mind, here is an explanation of what happens if you cannot pay back your loan or claim back your item.

When you cannot pay back the loan amount plus interest, you become a defaulter. As a defaulter, pawnshops will have to sell your item.

Usually, items are displayed in-store, or shops set up a selling or auction day. Since your item is considered a security, this is legal.

Thankfully, many pawnshops offer an extension for those who cannot pay back their loan on the first term.

If you want to extend your loan, the pawnshop will hold your items and not put them up for sale.

However, you will be required to pay fees and penalties, or higher interest. 


How to Pawn your Items in the Philippines (Step-by-Step)

Pawnshops are not hard to find in Metro Manila and provinces. If you’re wondering where and how you can pawn your items, we’ve compiled a guide for you.

1. Find an item you want to pawn

Before you can get money from a pawnshop, you have to pawn something. Based on the list above, assess which item you want to pawn.

Ideally, choose one that you can give up without any hassle. For example, pawning your wedding ring can be a hassle because it has sentimental value.

On the other hand, pawning an old phone that you don’t use anymore is more convenient. 

2. Find a pawnshop

Like any other business, pawnshops have their own area of expertise. So if you’re planning to pawn, make sure to find a pawnshop that specializes in your type of item.

For example, if you’re planning to pawn your land, find a pawnshop that is willing to accept land title.

The best way to choose a pawnshop is to ask around. If you have friends who have pawned items before, get their recommendations.

3. Fill up a form

When you walk into the pawnshop, you will be asked to fill up a form. This form contains basic information about you and your item.

Some information that is usually needed on your form include:

  • Your name and contact information
  • The item you want to pawn
  • The amount of money you want to borrow
  • The date you will pay the money back
  • Other information, such as the purpose of the loan, and collateral information

After this, simply present your requirements such as valid IDs. 

5. Wait for our item to get appraised

After you have filled up the form, a staff or a representative will conduct an appraisal of your item. This is to see if the item you want to pawn is authentic or in good condition.

When the appraisal is done, the staff will let you know if the item is acceptable.

6. Get your cash and loan ticket

After your item has been approved, get your cash and loan ticket. Hold your ticket until you have paid back your entire loan.

7. Pay back your loan

After you have received your cash, make sure to pay back your loan on time. This includes paying the interest and other fees you owe.


Requirements for Sangla or Pawn

Aside from the accompanying documents of the item you want to pawn (when applied), all you need to fulfill your loan is a valid ID.

This can be either of the following:


Where to Pawn your Items in the Philippines

If you plan on pawning your items, here are some of the most popular and reliable pawnshops to choose from.  

These traditional pawnshops have a brick-and-mortar store, which means you have to physically go there to access their services. 

M. Lhuillier

With 3,000 branches all over the country, M. Lhuillier Quick Cash Loan is a great option. This loan offers low interest rates and high appraisal fees so you can get the best value in your transaction.

Your collateral items will be securely packed and stored in a vault for added security so you don’t have to worry about them getting damaged.

This pawnshop also offers an easy loan renewal process. For this, you can simply go to any branch if you can’t return to the one where you processed your loan (except for OPI Prenda) 


Cebuana Lhuillier

Cebuana Lhuillier is another popular pawnshop that you can take advantage of. With 2,500 branches in the Philippines, they promise 30% higher appraisal rate vs. other pawnshops.

This pawnshop charges P4 for every P100 loan amount, and you’ll also be charged 1% of your principal loan (will not exceed P5). 

Cebuana Lhuillier Pawnshop offers 90 days of minimum maturity and a maximum of 4 months of loan repayment.

The interest rate for renewed transactions starts at 4% plus 2% liquidated damages, as well as a P5 service charge.

Palawan Pawnshop

With more than 3,300 branches, Palawan Pawnshop offers four instant loan packages you can choose from to fit your pawning needs. These are:

Package 1 (with 1% advance interest)

  • 1% (1-11 days)
  • 2% (12-22 days)
  • 3% (23-33 days)

Package 2 (no advance interest)

  • 3.5% per month

Package 3 (1-month advance interest)

  • 2.5% per month

Package 4 (2 months advance interest)

  • 2% per month 

Villarica Pawnshop

Villarica Pawnshop also has tons of branches in the Philippines, but it is more common in major cities.

The process of pawning your items only takes 5 minutes. Items are stored in a concrete vault for safekeeping. 


Tambunting Pawnshop

With Tambunting Pawnshop, you can pawn your items for a maximum of 6 months before it is sold in auction or through jewelry outlets. 


Online Sangla in the Philippines (PawnHero)

You may think you can only pawn your items in certain locations. However, pawnshops have also adapted to the modern needs of Filipinos.

Just as you can apply for online loans, it’s also possible to pawn your items online. 

One online pawnshop you can use is the PawnHero PawnshAPP (what a clever name!!). This app is available on iOs App Store and Google Play Store. 

With this app, you can access all services of a physical pawnshop right in the comfort of your home. This includes:

  • Pawning
  • Item redemption
  • In-app messaging for loan assistance/support
  • loan renewal

To pawn an item on this app, simply fill out an application form that contains your basic information and a description of the item you want to pawn. After this, you will receive an initial offer. 

From there, you can book a walk-in schedule for a physical appraisal of your item. If you don’t want to leave your home, choose the pickup option.

This is completely safe since your item will be picked up by a Pawntrooper rider for free and it will be delivered to the PawnHero appraisal center in BGC, Taguig. The appraisal process usually takes no more than a day to complete. 

After this process, simply wait for the final offer. Once you agree to the offer, you can instantly receive your money through PESONet or InstaPay.

If you decline, your item will be returned to your home free of charge. 


Tips Before You Pawn or Sangla your items

Before you start the pawning process, here are some tips to keep in mind.

Do your research

Before you start pawning or using pawnshops, make sure to research first. This includes the type of items you want to pawn, and the existing pawnshops near you.

Compare the offers of various pawnshops, and choose the one that fits your needs best. 

Know the loan terms

Before you sign a loan contract, be familiar with the terms and conditions. Do not rush the loan contract signing.

There is no need to sign the same if you are not in full understanding of what it says.

Pawn a high-value item 

Pawning a high-value item can give you a larger amount of money upfront, so you can use it for whatever purpose you need.

Bring documents when available

Although IDs are usually the only documents you need when applying for a pawn loan, you may also bring documents of the items you want to pawn.

This can include:

  • Manufacturer’s Certificate of Origin (MCO)
  • Official Receipt or Invoice
  • Service Contract
  • Manufacturer’s or Seller’s Warranty
  • Bill of Sale
  • Certificate of Ownership or Certificate of Registration

Clean the item and make sure it is in good condition

Pawnshops inspect the item first, so make sure they can see that it is in good condition before they do this.

If the item looks like it is well taken care of, it may have a higher appraisal value, which results in you getting a higher loan amount.

Try to negotiate

If you are not satisfied with the initial offer of pawnshops, try to negotiate with them. They may increase the offer if you insist.

However, make sure to follow the next tip.

Be nice to the staff

The staff of the pawnshop will play a vital role in your pawning experience.

They will assess the item and negotiate your loan. If you are nice to them, you may experience a more pleasant transaction.

Do not rush 

If you are rushing the transaction, you are more likely to miss some important details and the pawnshop staff may not provide you with the best offer.

The best thing to do is to take your time and consider all offers carefully. If you’re not satisfied with the appraisal of your item, walk away and find another pawnshop. 

Always pay the loan on time

One of the reasons why pawnshops have a bad reputation is because people keep on defaulting on their loans.

If you miss a payment, the interest rate will increase and you’ll be left with more expensive bills.


Pawnshop Loans Are More Helpful Than You Think

Without question, pawnshops are incredibly beneficial for people who don’t have cash readily available. Traditional pawnshops are reliable sources of loan money, even though many of them charge high interest rates.

At the same time, pawnshops are also safer than taking informal loans. 

Simply put, the sooner you start learning how to use pawnshop loans to your advantage, the better it can help you ease your financial situation.

NOTE: Do not make pawning a habit

Remember, pawnshops are not banks. Pawning should not be your go-to solution for financial problems.

If you are constantly using pawnshops to make ends meet, try to find another way to improve your financial condition such as getting extra income.

Disclaimer: Grit PH strives to post up-to-date information on all investment, banking, and other financial products we feature. However, information may change without notice. Therefore, we do not guarantee the accuracy of the information listed on the website, including those provided by third parties at any particular time. 

It is best to review the updated terms and conditions of your chosen financial institution. Grit PH is not affiliated with the companies mentioned in the article. All testimonials and opinions are representative only of the writer’s experience, but the results will be unique to each individual.

About MJ de Castro

MJ de Castro is the lead personal finance columnist at Grit PH.

MJ started her career as a writer for her local government’s City Information Office. Later on, she became a news anchor on PTV Davao del Norte.

Wanting to break free from the shackles of her 9-to-5 career to live by the beach, she pursued remote work. Over the years, she has developed a wide specialization on health, financial literacy, entrepreneurship, branding, and travel.

Now, she juggles writing professionally, her business centering on women’s menstrual health, and surfing.

Education: Ateneo de Davao University (AB Mass Communication)
Focus: Personal Finance, Personal Development, Entrepreneurship, & Marketing

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