Helping you understand Pawnbroking
To accept goods into pawn, a pawnbroker conducts an on-the-spot valuation. The customer and the pawnbroker will agree on the sum to be advanced, and the pawnbroker will present a completed document called 'Pre Contract Information'. Like a bank, a pawnbroker earns income from the interest charged on a loan secured by a pledged item.
Short-term cash flow can be the main reason most people use a pawnbroker, where convenience and service speed are unrivalled. A loan will just as often be obtained for extra spending money as for clearing an outstanding telephone bill. It is flexible, transparent, competitively priced and immediate, and it is these factors that customers prefer. The result is that a high number of customers are satisfied with the service they receive.
Quick information guide:
How much can you lend?
A pawnbroker will lend from as little as £25 to many thousands of pounds in one transaction that requires no credit checks or lengthy meetings, using your goods as security.
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Are there any credit checks?
Unlike other forms of credit, pawnbrokers can assess creditworthiness based on the value of an item if sold. Therefore, customers are normally not credit-checked.
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Is pawning goods affordable?
Borrowing money against goods you already own is an affordable alternative to a bank overdraft or other type of loan. Pawnbroking is a serious alternative to using the services offered by the High Street bank.
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If the customer wishes to proceed with the transaction, they sign the actual agreement, which is a document detailing their rights and protection under the Consumer Credit Act 1974, as well as the terms and conditions of the loan. The customer receives, as part of the document itself, a pawn receipt for presentation when redeeming the goods. The agreement is usually for a period of six or seven months.
A customer has the right to give notice to withdraw from the agreement within 14 days and to make partial or full early repayments. They are entitled to redeem the property by paying the original loan plus the amount due at any time during the contract period.
Unlike other forms of credit, pawnbrokers can assess creditworthiness based on the value of the item if sold. Therefore, customers are normally not credit-checked.
When the loan and the interest are paid, the goods are returned to the customer. If the customer has not repaid the loan during this time and the loan was over £100 they will receive notice that the property is due to be sold, giving them a further statutory period of 14 days in which to redeem (the customer may have the option at the end of the contract to renew the loan by the payment of interest only and the rewriting of a fresh agreement).
If the customer does not renew or respond to the notice served, the pawnbroker may take steps to dispose of the goods. Having served the notice of an intention to sell the goods, the pawnbroker must obtain the goods' true market value on the date of sale, ensuring a fair price for the customer.
Borrowing against goods you already own just makes sense...
Pawnbroking is a serious alternative to services from a High Street bank.
Flexible
From as little as £25 to many thousands of pounds
Transparent
You're protected under the Consumer Credit Act
Affordable
An affordable alternative to overdrafts or loans
Immediate
Convenience and service speed are unrivalled
Where the proceeds of the sale exceed the amount due to the pawnbroker, the balance is returned to the customer. Unless a full credit check has been undertaken, which is unlikely, the customer is not pursued for any debt and will never pay more than the value achieved when the item is sold.
Contrary to popular myth, only where the loan was for less than £75 (and the contract period was six months) does the pawnbroker gain title to the goods where the customer has not repaid the loan. The pawnbroker does not wish to gain title to property, as they are in the business of lending money and they wish far more to see the loan repaid without needing to resort to the sale of property. This way not only is the debt cleared in full but the customer is happy at the return of their goods and has possession of them to return again in the future.
If you were to walk into a pawnbroker's shop today, you could be forgiven for thinking that you had just walked into your local bank or building society. Pawnbroking is now a serious alternative to services from a High Street bank. Customers realise that borrowing money against goods they already own is an affordable alternative to a bank overdraft or other type of loan.
Ideal items to pawn include gold, jewellery, watches and high value items because...
Pawnbroking businesses are on the High Street and are often jewellery retailers, giving them a perfect shop setup for lending and safely storing goods. Consequently, the security that the vast majority of pawnbrokers accept is gold, jewellery and watches. This is because they are:
- Easy to value
- Easy to store
- Are a luxury 'can do without' item
- Do not perish
- Do not generally depreciate
- Have an established second-hand market
A pawnbroker will lend from as little as £25 to many thousands of pounds in one transaction that requires no credit checks or lengthy meetings or form filling. Short-term cashflow is the reason most people use a pawnbroker, where convenience and speed of service are quite unrivaled. A loan will just as often be obtained for some extra spending money as it will be to clear an outstanding telephone bill. It is flexible, transparent, competitively priced and immediate and it is these factors that customers prefer. The result is that a high number of customers are satisfied with the service they receive. All pawnbrokers are authorised and regulated by the Financial Conduct Authority and maintain high standards to ensure good outcomes are delivered to consumers.
If you need any money advice, go to https://www.moneyadviceservice.org.uk/en/articles/pawnbrokers-how-they-work