Well-heeled tread a path to the pawn shop by Finance News Bulletin

Published: 23/05/07

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20normal Life hit by lapses chargeBuoyant Kesa careful over outlookH&M shares rise as profits beat forecasts Wall St rally drives London higherWolters Kluwer mulls education component saleLloyd’s underwriting income rises 20%Blair in tough and loving farewellPawnbroking is really borrowing cash from yourself Or at least, that’s what the National Pawnbrokers friendship saysSuch a description is as euphemistic as the aged pawnbroking phrase “popping over to see uncle” Both are designed to extra the blushes of customers embarrassed to be associated with the industry’s sordid image

No equivocation can disguise the fact that pawnbroking can be a very luxurious method to obtain a loan Interest rates are calculated on a monthly basis with association members charging an standard of 7 per cent per month for a standard six- month agreement But this rate varies depending on how much is borrowedYet pawnbroking is currently enjoying physically powerful growth, with the most prestigious end of the market experiencing fast expansion

Suttons & Robertson, the lately merged pawnbroker jewellers, reported that it has increased its loan book by £1m in the history three months on the back of an advertising campaign, while other niche high-end businesses such as Fulham Pawnbrokers have also knowledgeable an add to in customPeter Coleman, head of pawnbroking at Fish Brothers, a relations jewellers and pawnbrokers set up in 1830, has seen a move in the clientele coming into the stores of late: “We are seeing a lot more quality luxurious items coming in at the moment and the range of people coming into our stores has changed”Nathan Finch, helper secretary general of the National Pawnbrokers friendship, believes that this could be partially due to the lack of stigma attached to debt these days“A group of people get into short-term cash run problems

Pawnbroking involves no fees or penalties, and for short-term loans it offers competitive rates The benefit it has over applying for a credit card or a loan from another monetary institution is that you can borrow the money immediately pace is very highly valued”When pawning an item you can expect to borrow up to 50 per cent of its resale value

The thing remains your property unless you let the agreement – normally for six months – expire You may redeem the item at any time, though a minimum of one month’s interest must be paid At the finish of the contract a letter will be sent to alert you of the contract’s expiry, detailing how the thing will be sold, and offering 14 days to cash in itA common misconception is that pawnbrokers create most of their money from reselling unclaimed items

In information they make most of their profits from the interest paid on items and would rather customers redeemed them and returned to borrow more money James Tannahill, manager of Suttons & Robertson, estimates that most of his clients redeem their items after two to three monthsIf an item is repledged it is not uncommon for the pawnbroker to offer to lend a larger proportion of its worth because the customer has demonstrated that they worth the thing and will probably redeem it againMost pawnbrokers operate a tiered interest rate, and will offer a inferior rate for a loan in use out against a highly valuable item or for returning clientele

Rates can fall as low as 3 per centThe glory days of pawnbroking were at the end of the nineteenth century, when pawnshops outnumbered pubs in the UK With the advent of the wellbeing state, the shops reduced in number to less than 100 by the 1980sTo counter this trend pawnbrokers have in the history few existence been expanding their remit to offer services such as cheque cashing, money owing consolidation and car hire

Shop interiors have been smartened up and manacles have emerged on high streets For companies such as Harvey and Thompson, which recently scheduled on the option Investment Market (Aim), this strategy has clearly workedMark Dennis, manager of Fulham Pawnbrokers, believes that this better visibility has helped attract a wider diversity of clients A qualified rhombus grader and ex-antique dealer, he has seen an add to in the fine art and antiques coming into the store from well-heeled customers looking for a quick fasten of cash

The clientele which high-end pawnbrokers draw tend to be asset-rich and time-poor The city dealer going through a tough year, borrowing on the Rolex he bought with last year’s extra, or the harassed mother bringing in a relations painting to pay for train feesFew are likely to want to discuss their financial difficulties in detail and customers are haggard by the family member anonymity pawnbroking offers No questions regarding circumstances are asked and a home visiting service can be set

Pawnbroking’s poor image remains a restraint on growth But it has its place and has proved so useful to one relations that they have been pawning the same choker for three generations= requires subscription to FTcom* Minimum delay 15 minutesAll era are London timeFT HomeSite mapContact usHelpAdvertise with the FTPress enquiriesStudent offersFT ConferencesFT Research CentreCorporate subscriptionsFT collection Copyright The Financial Times Ltd 2006

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