Even flash gits use pawnbrokers- what's the layaway on a Ferrari?

christmas pawnWe told you yesterday about pawnbroker Albemarle & Bond’s ambitious expansion plans, heralding 2012 as the “age of the pawnbroker” according to A&B’s chief exec Barry Stevenson. However, rival firm borro.com has now virtually opened its vaults to prove that it is not just Brighthouse-loving Council Estatees who avail themselves of the pawnbroker’s quick and easy cash.

Poor bonus-starved bankers and hard-up entrepeneurs are proving a rich seam of custom for pawnbrokers as they hand over their Ferraris, Rolexes, and fine wine in exchange for cash. borro’s vaults also contain diamond rings, Fender Stratocaster guitars, Ivor Novello songwriting awards, and proper expensive art - including a Henry Moore sculpture*.

Paul Aitken, borro.com’s founder, told The Times that this year "the volume of clients has more than doubled and the average size of loan has tripled", adding that he had made a single loan of £1 million against a fine art collection.

The pawnbrokers’ success is being attributed to the banks miserly un-Christmassy approach to lending. Unless applicants meet stringent ‘model’ criteria, the banks are likely to turn them away- "we get a lot of people saying they don't even bother trying at the bank any more," confirmed Mr Aitken.

Among those finding cash harder to come by are entrepreneurs and freelancers whose unreliable, if impressive, incomes have made it more difficult to seek loans from conventional sources. So it this enough to shake off the stigma? Would you consider borrowing from a pawnbroker, knowing you are in esteemed, Rolex-wearing company?

Malcolm Hurlston, who founded the Consumer Credit Counselling Service, the debt advice charity, stressed that pawnbrokers had advantages for certain types of borrowing.

"They are a great deal better than many other sources of lending," he said. "For one-off borrowing needs they can be very convenient and the sector is well regulated – we don't hear many complaints." Although interest rates expressed as APRs could be in the hundreds, he said this was less important for short-term borrowing. And most users do tend to borrow for only a short time, the average loan term being four and a half months, and all but 10-12% of loans are repaid in full. Those defaulting have their valuables auctioned off.

But pawnbrokers are not recommended as a regular source of borrowing. "If you find you are using them every week, there will be better ways to borrow. Regular use of pawnbrokers is a sign that you need to take action about your debt," added Mr Hurlston.

According to figures from the National Pawnbroking Association, pawnbroker lending in January 2011 was up, month on month, by 79% . Des Milligan, the chief executive of the National Pawnbrokers Association, said: “January is traditionally the busiest time of year for pawnbrokers as customers pawn their jewellery to help pay their Christmas bills.” Other reasons for the increase include the impending 'Blue Monday', the third Monday in January, when the next pay check is eagerly awaited, the appearance of credit card bills from overspending at Christmas and impending end-of-January tax bills.

It remains to be seen whether this coming January will see a similar, or even higher increase in lending. But given the banks’ even tighter tight-fistedness, coupled with increased availability through proliferations of branches and online providers, the odds are in Uncle’s favour.

* we are philistines here at BitterWallet and wouldn’t know a Henry Moore if it bit us on the bottom. But it sounds good.


  • heywood j.
    I wonder if the enterprise trust would give me another free business startup loan for a pawn shop ? It's an easy business model to present and the customer base is huge.
  • Chris
    I once heard an, almost certainly, shaggy dog story about a pawnbroker, a rich man and his car. The rich man decides to pawn his car and the pawnbroker is initially surprised but eventually takes it. The rich man is gone for a few weeks and then returns and settles in full. Again the pawnbroker is surprised and asked him why he needed the loan in the first place. The rich man replies - "I didn't - I just needed somewhere secure to leave the car while I was on holiday".
  • Gordon B.
    Hmmm, good to know, I may need to sell some gold in the future, not at the moment though, the price is simply too high.
  • Tony B.
    nice one gordon. thats the sort of move of an award winning chancellor

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