Pawnshop in Cimahi offers loans with easy terms

By Kafil Yamin

BANDUNG (JP): The Composite Index at the Jakarta Stock Exchange hit a low of 431.43 and the rupiah fell to 9,523 against the greenback. But the crowd here had no idea what these figures really meant.

The people at the pawnshop in Cimahi, West Java, have only one economic indicator: the size of the crowd in the shop. "If times are hard, there will be more people here. If things are better, it's quieter," said Basuki Widyanto, the head of Cimahi pawnshop.

To put it another way: when people can no longer afford life's necessities, the size of the crowd looking to pawn their possessions is larger. And as the Idul Fitri holiday draws near, more people are seen at the pawnshop.

Before the month of Ramadhan, the pawnshop had about 100 visitors a day, but last week that number rose to about 500 people a day. They pawned what they could: from TV sets and VCD players, to gold necklaces, rings and batik clothes. For many of them, this is just how they get cash.

Maemunah, a mother of three, had some bedsheets to pawn. She took a seat and waited to be called and get her money. She said she had no idea how much she would get. "But I guess I will get Rp 20,000 or Rp 25,000."

She is a regular and knows to expect about 40 percent of the value of the item being pawned. "I wish I did not have to come here, but I cannot find any other way to get money except to pawn my goods. We need money badly."

Maemunah's husband is a primary school teacher whose income is not enough to make ends meet. So they run a small warung that sells daily necessities, but many of their customers make purchases on credit. "My money is tied up at a time when we are in need of a lot of things. You know it will soon be Lebaran," she said.

Jubaidah, a mother of four, said she had come to the pawnshop because her son needed to pay his school fees.

"You can call it a pawn rush these days," said Basuki, aware that Ramadhan and Idul Fitri were behind the rush.

From January to November this year, the 12 pawnshops in Bandung municipality paid out Rp 265 billion to its customers. Cimahi pawnshop was responsible for Rp 13.4 billion of this amount.

Some members of the community are regulars at the pawnshop. If they have financial problems, they come here for cash, and when they are back on their feet they will reclaim their pawned belongings.

"I've just pawned my mixer," said Jabuidah, adding that she needs a mixer to make cakes for Lebaran, but luckily she has another one.

She said the pawnshop had become her partner and friend. "I think that for all of us here, the pawnshop has become our good friend."

"A friend, indeed, because this is where we always come when we are in need," added Tatang Rusadi, who came to the pawnshop on Jl. Ahmad Yani with a brand-new VCD player.

The main attraction of the pawnshop is the simple procedures. People just give their goods to an officer, who in a matter of minutes (or seconds) appraises the value of the items and decides how much the pawnshop will pay.

"The only requirement is that the items not be defective or damaged. Legal documents are required for certain items," Basuki said.

The pawnshop offers four different categories of loans: A (for loans between Rp 5,000 and Rp 45,000); B (Rp 45,000 to Rp 150,000); C (Rp 150,000 to Rp 500,000) and D (Rp 500,000 to Rp 20,000,000).

For the A and B categories, the pawnshop imposes an 1.25 percent interest rate for every fifteen days. For C-category loans the interest rate is 1.5 percent, and for loans in the D category the interest rate is 1.7 percent for every fifteen days.

"This is still better than the rate imposed by loan sharks," one of the customers said.

If a pawned item is not reclaimed after 120 days, or four month, the pawnshop has the right to sell the item at auction.

As more people come to pawn their goods, there is also an increasing number of people failing to reclaim their belongings. There has been about a 10 percent increase this year in the number of items not reclaimed.

And there are always a few people who take advantage of this situation.

Tatang often goes to the pawnshop auctions to try and purchase the items that have caught his eye.

"Buying things at the auction saves a lot of money. I once bought a 20-inch color TV for only Rp 150,000," he said.