Along with various credit products, the Georgian bank sector also offers pawn-loans to the market.
This credit product enables to take loans for a certain period in exchange for precious metals, including gold, silver and so on. When issuing loans, commercial banks, first of all, estimate the consumer’s credit history.
Pawn-loans are issued under quick and simple regulations, because it is a guaranteed loan and less attention is paid to our revenues. The purpose of the pawn-lawn is unlimited. As to the payment schedule, in this case, the consumers are able to choose whether to pay the loan interest rate every month or every two or three months.
As to the loan maturity period, it is individual and the maturity periods may be extended by negotiations. The higher rate of gold, the higher loans we can take. Interest rates on GEL and USD denominated loans are different:
On average, the annual interest rate in GEL makes up 36% and in USD – 24%. The monthly fee includes only the loan interest rate and it does not encompass the principal sum. The commission fees for ahead of schedule repayment of the loan are different, but on average it constitutes daily 0.3% of the principal sum. In the event of several-month delay, the bank is entitled to sell the precious metal for the loan service.
What should be know before taking a pawn-loan?
- Loan currency
- Loan Payment Schedule
- Interest Rate
- Fine on Payment Delay
- Commission Fee for Issuing Loan
Besides commercial banks, nonbank finance sector also issue pawn-loans, including microfinance organizations and pawnshops, while the Georgian legislation does not regulate this sector.