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The commitment is one of the three main solutions that Mexicans use to face the debts at the beginning of the year, only after looking for an extra income and using an emergency or savings fund, according to a survey carried out by the financial services platform Coru.com and market research firm Brad Engagment.
Among the items that Mexicans pawn to get out of their debts are: jewelry (32.2%), televisions (20.2%), computers or tablets (16.6%), cell phones (14.4%), watches (12.6%) and others (4% ), according to the same survey.
Meanwhile, the amount they expect to receive for the pawn of their assets ranges from 1,000 to 3,000 pesos (41.5%), 3 to 5,000 pesos (35.9%), from 5 to 10,000 pesos (8.8%), while only 9.7% expect to receive less than one thousand pesos and 4.1% for more than 10 thousand pesos.
“Although there are currently many pawn shops, not all of them are fair with their clients or are not aligned with the requirements of the Federal Consumer Prosecutor’s Office (Profeco)” , warns Luis Madrigal, director of Coru.com
According to INEGI, more than 9,000 Montepíos and pawn shops operate under the pawn scheme in the country. Two are non-profit private assistance institutions ( Nacional Monte de Piedad and Rafael Dondé Foundation ) and private companies.
In order to go to a reliable and regulated institution, you have to identify the elements that may be fraud and avoid these dependencies. Among the suspicious signals to detect are:
1. Too high amounts are promised for the pledge as collateral
Attention: when pawning, there must be a valuation process, and generally the appraisers award half the real cost of the object, at most. That’s not counting storage and interest costs.
2. They do not explain the rights of the client who pawns something
Remember that it is not a sale, but rather a pledge is left as ‘insurance’ to obtain the loan. In theory it can be recovered by paying the amount they lend, plus the interest generated. But if the client could not pay in a timely manner and his garment was put up for sale, he has the right to too much: to know the amount of the sale, and if it was higher, find out if it is worthy of compensation.
In addition, if the client loses the intention to return for his object as a pledge, he must notify it to avoid paying the monthly interest fee.
The basic elements to identify a legal pawn shop are:
The adhesion contract granted by the pawnbroker must include the Public Registry number of Pawnbrokers granted by Profeco , as well as the date on which this registry was authorized. On the page of the Commercial Bureau of the Attorney General’s Office you can verify if the registration number presented by the pawn shop is valid.
The pawn shop should also have a document on hand that proves your registration number is valid. You can also visit the list of Registered Houses and consult additional information. The registration must be renewed every year, so even if the pawn shop exhibits one, it may be expired.
All information related to the service they provide must be visible and available in a brochure or on the internet. This segment includes the hours and days of service, loan limits, accepted pledges, the Total Annual Cost (CAT) (this must also be presented in months and days), payment terms, procedure for pawning an asset and for market it, and the expenses for storing the garment.
It is proof that the operation was actually carried out. It should include the description of the pledge, the amount loaned and its percentage of the appraisal, payment terms, forms of payments, endorsement options, guarantees and their coverage, and the consequences in case one of the parties breaches the contract.
Scales for weighing objects such as jewelry must have a recent calibration hologram. This ensures that the weight shown is the real one and that they are not giving less money for the garment.
Recommendations when going to a pawn shop
Before pawning an item, the consumer has the right to know the terms and conditions of the provision of the service, as well as the amount of the loan to be granted prior to signing the contract, among other measures. For any questions or clarification, check the Register of Pawnbrokers registered with Profeco.
Always keep the ballot of the article already pawned, and for no reason endorse or transfer it. Since even if the object cannot be recovered and is sold, this is the proof to demand a compensation amount.
Check if you have too much right. It is a clause of the pawnshops that establishes a period of up to 12 months to recover a percentage of the article, in the case of expired tickets whose articles were sold.
Assess other options such as personal or payroll loans, even assess whether it is better to sell rather than pawn; according to the total cost that includes taxes (CAT) and if it is garments with high personal value.