Private pawn shops helping students raise cash

Private pawn shops helping students raise cash

Slamet Susanto, The Jakarta Post, Yogyakarta

The white painted house on Jl. Pangeran Mangkubumi in Yogyakarta
is filled to bursting with people, mostly students. A piece of
cardboard placed at the door reads: "Cell phones, computers and
vouchers are not accepted".

As the door opens, there is a whiteboard reading: "Customers
must show original identity card and leave a copy". There is
another sign: "Items are not redeemable 10 days after the cut-off
date".

Welcome to the UD Sukardja, a private pawn shop owned by Siti
Khotijah Sukarja, 57, and mother of four.

Every afternoon before Idul Fitri, or Lebaran, her house-cum-
pawn shop is always crowded by people who need instant cash for
their holiday.

"This is a legal business with a permit. Usually closer to
Lebaran, customers, particularly students, come in a steady
stream," Khotijah told The Jakarta Post.

She said starting this year, she decided to accept only
motorcycles with a Yogyakarta license plate, televisions and
other electronic goods as collateral.

The pawnbroker refused to accept cell phones and computers
because their prices fluctuated severely.

"When an item is brought here, it may cost Rp 1 million, but
four months later, it may cost only Rp 400,000. If one borrows Rp
500,000 but doesn't redeem the item, my business will suffer,"
she explained.

Pawning your belongings is easy at Khotijah's. You need only
to show your original ID card and leave a copy with the shop.

Customers should redeem their belongings within four months at
the most, and this time frame cannot be extended. After you
redeem your belongings and bring them home, though, you may pawn
them again the next day.

There is an interest of 10 percent to redeem pawned items. If
the customer redeems the item a month before the four months is
up, the interest is six percent; if the item is redeemed two
weeks before the set period, the interest is eight percent.

If the customer doesn't redeem the item 10 days after the cut-
off period, the collateral will be sold.

Khotijah said she didn't accept gold jewelry because most of
those sold on the market are made of 18 karat gold.

She said she ran the business to help students who are in dire
need of cash to pay for their tuition, especially those whose
parents are not in Yogyakarta.

"If they can't pay their tuition, they might have to postpone
their studies for one semester. They will suffer. So, my
intention is to help such students."

Khotijah, however, declined to reveal her turnover. "I never
count the money. I don't even remember exactly when I started my
business. But it is surely more than 25 years ago," she said.

Khotijah is not the only one who runs a pawn shop in
Yogyakarta.

Bambang Triyanto, 29, started his shop last year on Jl.
Brontokusuman Mg III No. 913 after a friend, who was studying at
a private university, borrowed some money from him to celebrate
Idul Fitri in his hometown, Jambi, Sumatra. In return, he lent
Bambang his motorcycle.

This inspired Bambang and several friends to start up a pawn
shop and, at the same time, help students who needed instant
cash.

"But we only accept motorcycles (as collateral)," he said.

Along with his friend Bajuli, he raised Rp 7 million, which he
lent to anyone in need. Bambang said he did not charge any
interest.

"If we ask for interest, we will look like rentenir (loan
shark)."

Bambang used the collateral property to earn some extra money.
To this end, he asked his customers to sign a release saying they
would not mind if the vehicle is used as an ojek (motorcycle
taxi) or is rented.

"But we will be responsible for any damage or losses. If
something breaks, we will fix it. If the motorcycle is lost, we
will replace it."

When asked about his gross income last year, he said, "I don't
remember how many motorcycles were brought here. But the gross
income was Rp 20 million. This year, we have provided as much as
Rp 25 million cash."

He said people "pawned" their motorcycles not only because
they needed money, but also because of reasons of security,
especially if they have to leave their bike behind when they take
off on long holidays.

Yayat Sudrajat, 26, a student from Ciamis, West Java, said he
pawned his motorcycle because he needed some ready cash.

"If I leave my motorcycle at my boarding house, it might be
stolen. It's better to leave it at a pawn shop," he said.

He said he pawned his Suzuki Shogun motorcycle for Rp 400,000
to buy a ticket to his hometown for Idul Fitri. He was not
tempted to borrow more than this, as he feared he could not
redeem it on time.

Spokeswoman of the Yogyakarta provincial pawn office Ninoek
Sriyanti concurred that many people borrowed less than the actual
value of the pawned item. Many students, for example, borrowed
only Rp 400,000 to Rp 700,000, even though the motorcycles they
left as collateral cost millions of rupiah each.

"They need to feel secure when they return to their hometown.
Instead of leaving the motorcycle at their boarding houses and
risking it being damaged or stolen, they prefer to take it to a
pawn shop," she said.

Ninoek said private pawn shops did not affect the business of
state pawn shops.

"We are still providing a huge amount of credit, reaching Rp
35 billion or Rp 1.3 billion a day in any given month. A week
before Idul Fitri, it may reach Rp 1.75 billion a day."

She warned, however, that customers should be wary about being
cheated by private pawnbrokers.