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TCSSLS is considering raising the gold lending standard to provide the public with higher borrowing

Taipei City Secured Small Loans Service (TCSSLS) is a government utility operated by the Pawnshop Act, not relying on the Taipei City government to budget subsidies. Currently, its monthly mortgage interest rate is 0.68% for the general public, 0.62% for Taipei citizens, and 0.36% for disadvantaged groups which is the lowest in the pawnshop industry in the country to assist people in need. There are no warehouse fees or interest withholdings when people apply for mortgage loans. 


The Pawnshop Act stipulates that the maturity date given by a pawnshop is 3 months. It is allowed to redeem the pawned item or pay off the interest to extend the maturity date within five days after the loan period expires. Failure to redeem the pawned item or extend the expiration date within five days after the expiration, the ownership of the pledged item shall be transferred to the pawnshop. This concept belongs to the category of chattel pledges in Civil Code and is different from real estate mortgages. 


The TCSSLS stated that to provide the public with a longer turnaround time, besides the loan period of 6 months, the TCSSLS also provides a grace period, totaling more than one year. After the pawn period expires, the TCSSLS actively reminds customers to come and pay the interest, striving to help individuals prevent their pawned items from being auctioned. The average  unredeemed rate in the past three years is only about 1%.


Regarding the reported the TCSSLS covered its financial gap by borrowers who are unable to redeem their items. The TCSSLS explained that in recent years, it has actively promoted the subsidiary business SHWOO website, which not only improves circular economic benefits, but also continues providing pawn services by non-operating income. Operations have been profitable over the years and there is no financial gap.


The TCSSLS further stated that the most important reason why the pawnshop industry has a long history is that it has always played a service role that is different from banks, providing assistance to people's emergency financial needs. After taking office, Mayor Jiang expects to change the public's traditional negative image of the pawnshop industry with integrity and transparency.


In July 2023, the TCSSLS newly distributed the Newborn Blessing Fund to feedback to customers and provide positive value and meaning. Considering that raising the gold lending standard will help alleviate the public’s emergency financial needs, the TCSSLS is currently studying to improve the standards for gold loans and hopes to expand the provision of low-interest and secure pawn services to the public.