Pawnbrokers profit from credit crunch
PAWNBROKING has become the poor man’s credit card in the North East.
It’s one of the few sectors to profit from the credit crunch misery, reporting a rise in demand, particularly among younger customers wanting short term loans, even to fund a night out.
With interest rates as low as 7-8% on cash, pawnbroking compares well with credit and store cards, running as high as 25%.
Alex Affleck and business partner Mandy Bedingfield, of James Ramsden pawnbrokers in Redcar, put the surge in business down to reduced availability of credit and the rising price of gold, which has spiralled to around US $900 per ounce.
“We have definitely seen more customers coming through the doors,” said Mr Affleck. “People are finding it more difficult to get bank loans and we can offer a convenient way of accessing cash quickly.”
Pawnbrokers had shed the Shylock image, he said, and were becoming a mainstream source of lending for more and more people on Teesside. Most pawned items were eventually returned to their owners.
“We prefer to lend money to people as we get more repeat business that way,” he said. “The majority of people would rather get their goods back as they often have sentimental value.”
Typically, pawnbrokers lend up to 50% of an item’s value for six months.
The National Pawnbrokers Association (NPA), which has 15 Teesside members, said 90% had reported an increase in trade.
Head of the NPA, Des Milligan, said one person had recently pawned his Aston Martin for £30,000.
“Nowadays many people can’t get a credit card or don’t trust themselves with it. It’s much cheaper going into a pawnbrokers.”
Denise McDougall, supervisor at Herbert Brown and Son in Middlesbrough, said demand was increasingly coming from young people for short term loans on high-value bling.
“Previously pawnbroking was a necessity but now youngsters do it more for leisure, to fund a good night out,” said Ms McDougall.
It’s a long way from the thirteenth century, when Franciscan monks launched the first European pawnbroking service to help the poor.
The emblem of the trade - the three balls - has its roots in the crest of the Medici family, which built its Italian fortune in the fifteenth century.
The introduction of social security threatened to kill off the trade in Britain in the 1950s and 1960s, but the 1974 Consumer Credit Act - which demanded pawnbrokers provide written details of lending criteria - sparked a revival.
Share
