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.