2012 – The Dawn Of The Pawnbroker Age

While MP’s like Stella Creasy and Margo MacDonald spent much of last year condeming payday loans and trying to get the lenders shut down, the dawn of the pawnbroker age is predicted for 2012 after the industry quitely went about rapidly growing its business in 2011 with the expansion of more pawn shops and diversifying into the cash for gold market.

For example, Albermarle & Bond – Britain’s largest pawnbroker – plans to take on a further 300 staff members and open at least 25 new pawn shops up and down the country in 2012.

The up market London pawbroker Borro say their client base tend to be bankers who have seen bonuses they were depending on cut and entrepreneurs who can no longer get loans from banks, angels, dragons and other sources they have traditionally been able to rely on for their funding.

Paul Aitken founded Borro just 4 years ago and saw his client base double and average loan size treble in 2011 and with similar growth expected in 2012, no wonder the industry is saying next year will be the dawn of the pawnbroker age.

Borro offer loans from £1000 to £1 million secured on an item or collection of items of value. Expect to pay 39% in interest for a loan of £1 million and up to 69% for loans under £10,000

The items of value used as security include Rolexes, fine wines, Ferraris, diamonds and fine art. Aitkin says that as well as the usual items his vaults are currently also holding a couple of rare Fender guitars, a pair of Ivor Novello awards and a Henry Moore sculpture.

His single biggest loan of 2011 was for £1 million secured on a private art collection.

Defaults at Borro are currently running at 11% and for those who don’t return to settle their debt, their items are auctioned off.

2011 saw Albermarle & Bond branch into the cash for gold market which added to their growth. In the companies AGM statement for the 4 months ending in October they said:

“During this most recent period demand for short term cash has remained high, and with a strong gold price, the group’s services enabling customers to access good value loans by pawning gold jewellery and realise cash by selling unwanted gold jewellery have continued to grow.”

While we don’t recommend selling your gold jewellery for cash as you will only get the scrap value, a pawnbroker is an option you ought to consider if you need to raise some emergency funds and of course, you have something of value to use as security.

Most pawnbrokers will give you a much better deal than you will get from a money shop or online payday lender and you will get 6 months to pay it back – no monthly repayment plan, just repay the loan with the agreed acrued interest any time within 6 months and pick up your valuables. The earlier you settle the debt, the less interest you will pay.

As we enter the age of the pawnbroker we can expect other new start ups jumping on the gravy train just as they have done with payday loans. More pawnbrokers competing for business is good for the consumer though so shop around, don’t just take the first offer you are made. Each pawnbroker you visit will probably make you a different offer so we recommend you visit at least 3.

Source: Telegraph