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Pawn shops charge very high interest for loans based on the value of tangible assets (such as jewelry or other valuable items).
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Loan Sharks -- In Malaysia there is a growing concern of the high number of loan sharks who have surfaced in recent times offering cash loans to borrowers at exorbitant interest rates, some reaching 20% per month. Although illegal, many individuals resort to loan sharks as an easy method of financing their purchases, not realizing the high interest charged and high collateral demanded against these loans. These individuals either end up paying more than five or ten times the actual cost of their purchases or losing their collateral, comprising their home or car.
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Rent-to-own programs offer an opportunity to obtain home entertainment systems or appliances for a small weekly or monthly fee. However, the amount paid for the item usually far exceeds the cost if the item were bought on credit.
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Leasing -- Leasing is similar to a rent-to-own program but relates mostly to fixed assets such as equipment and vehicles and does not involve a major cash outlay. It is an agreement between a leasing company and the user of the equipment whereby the latter agrees to pay the former a specified sum of rental over a period of time in consideration for the use of the equipment owned by the leasing company.
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| Once executed, a lease agreement cannot be cancelled. The user does not have to purchase the equipment but if he or she so wishes the user may pay a nominal sum to buy the equipment at the end of the agreement period.
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| For related
links and additional reading, select your country/ market
below. |
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