Cash for gold is on the increase according to one of the biggest UK pawnbrokers despite the price of gold dropping from its earlier high of $1900 an ounce.
UK Pawnbrokers Albermarle and Bond say they continue to see growth thanks to consumers looking to sell unwanted gold jewellery together with the high demand for short term instant cash loans which has also seen growth caused mainly by the current economic climate.
Albermarle & Bond are one of the biggest chain of pawn shops in England and their chief executive Barry Stevenson told the Financial Times:
“Under our five-year growth plan we have made good progress in terms of developing the platform for a much larger business. Alongside the more visible store expansion programme, we are now operating from 202 outlets compared with 115 two years ago.”
Albermarle and Bond report their pledge book is up 15% while gross profit from their cash for gold service was up by 25% to just under £15m. A pledge book is the value of the total amount of pawned goods a pawnbroker holds in stock.
Business analyst Andrew Mitchell told the FT that investors were attracted to companies such as Albermarle and Bond, Borro and H&T pawnbrokers thanks to the resilient nature of the pawnbroker business as well as the prospect of long term growth thanks to the increase in high street outlets.
It’s not all good news for the Pawn industry though. Despite the growth in cash for gold and instant cash loans, Albermarle and Bond saw a slight drop in profit of the retail side of their business.
Most pawn shops will look to sell purchased or unclaimed pawned jewellery items in their shop front rather than send it to auction. Barry Stevenson told the FT:
“Retail is an integral part of the store proposition and operational focus, but we will continue to prefer to scrap second hand jewellery if this generates a better return on capital.” Original article in the FT is here.
Cash for gold is a fast and easy way to get hold of some money in an emergency but it’s not for everyone. Jewellery often has sentimental value as well as monetary so for many people who are looking to raise cash with some of their valuable assets, pawning the item is a good compromise and as the report above shows it is a method that is clearly on the increase.
It’s easy to see why too. Because the loan is secured on an item the APR charged is far less than an unsecured payday loan. Online pawnbrokers Borro for example charge just 68% APR meaning a £300 loan over 6 months secured by an item of value will cost you just under £90 in interest charges.
Compare payday loans and you find the cheapest £300 loan will cost you around £60 and that’s per month – not for six.
There are also no monthly payment plans to stick to either as most pawbrokers operate a 6 month contract – come back anytime within that period to settle the debt together with the accrued interest and get your item of value back or don’t return and they look to sell the item to retrieve their money and costs.