Pawnbroking 101

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When it comes to getting a pawnbroking loan, or an asset-backed loan, there are a lot of myths out there. A lot of people have a negative view of the pawnbroking industry because they seem to imagine it is where you go when you are down to your last penny and need cash fast. People envision not a beautiful shop like ours, filled with great things you want, but something out of a bad American film, where you might aim to sell your electric guitar.

We are here to let you know how it works and clear up some of the common myths about Pawnbroking.

First, here is a brief step by step of how it works.

 

Pawnbroking step by step:

  • A borrower ‘pledges’ an item of value for a set period.
    There are no restrictions on what the borrower can pledge, and the pawnbroker will work with the borrower to help them get the best from their item.
  • The pawnbroker releases a high percentage of the item’s value as a cash loan, upon which the customer will pay interest when the loan is redeemed
  • The loan can be repaid at any time during the loan period, along with any interest due, and the item will be returned
  • If the loan cannot be paid at the end of the loan period, the item is sold by the pawnbroker on behalf of the customer. Any excess earnings, after interest and the loan amount, have been repaid, are returned to the borrower.

 

Myth One – The “Pledge”:

Hopkins and Jones, being a London pawnbroker specialising in the antique jewellery and the second-hand luxury watch market. Some people think they will be selling the very clothes from their back, but no-one wants to buy that! They give a high-value loan, knowing the price they can get from the item. Because a pawnbroking loan is really secured asset finance, the rates are a lot cheaper than in an unsecured loan.

Myth Two: – The rate is high:

Some people may think the rate is high because it’s a fast, cash loan, and expect it to be. Yet with Hopkins and Jones same day cash loan service, you will be looking at between 4-6% and the first month free in some cases. There is no administration fee and a free appraisal of your goods and of how much cash you could access.

Myth Three – I am selling my goods: 

Pawnbroking is not selling. If you are thinking from the start, you’d rather sell, just mention it, as of course, we are also a licensed second-hand dealer, but a pawnbroking loan is a loan. You are saying you want your goods back. The pawnbroker will hold your goods, as security, but does not have the legal right to sell them until the loan period has expired.

Myth Four – Low-value loan:

If people imagine the American film style pawnbroker they also imagine someone who offers you a few dollars for a diamond ring, this is not the case. You can access loans from £500 – £10,000 within 24 hours. They know the retail value of your goods and will give a fair price.

Too good to be true:

The one actual fact is a pawnbroking loan is too good to be true, If you have read my other articles you have learned how it compares to other short term loans and beats them. The main thing people need to be aware of is this is an asset-backed loan and thus is low risk for the lender. It also means to take advantage of it, you need to have an asset worth lending against.

Please have a read of my article, is a Rolex a good investment for me?

» Loans, Pawnbroking » Pawnbroking 101
On July 26, 2019
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Hopkins & Jones Ltd is a trade member of The NPA (The National Pawnbrokers Association). Hopkins and Jones Limited, Company registration Number 433606. Registered Office, 7 William IV Street, London, WC2N 4DW. Hopkins and Jones Limited are authorised and regulated by the Financial Conduct Authority licence No 6520002 for the provision of pawnbroking loans.