Pawnbroking is proving to be the go-to solution for short term loans, without having to result to sky-high payday loans or unregulated lenders. The concept behind pawnbroking is simple – and it has been working for borrowers for hundreds if not thousands of years.
Central London pawnbrokers, Hopkins and Jones, take us through the simple loan process.
Pawnbroking step by step
- A borrower ‘pledges’ an item of value for a set period of time.
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.
Securing short term loans, in a world where banks are increasingly tricky to connect with, can be unregulated and expensive. However, pawnbroking is the option open to everyone regardless of their credit rating.
Kris Parish of Hopkins and Jones issues advice to those considering the pawnbroking option, “A reputable pawnbrokers will be a member of the National Pawnbrokers’ Association (NPA) and so governed by their Code of Conduct. At Hopkins and Jones, not only are we members of the NPA, but we’re also regulated by the Financial Conduct Authority (FCA) which ensures that we act with propriety with and on behalf of our clients”.
Pawnbrokers are not immune from the pressures of business, with increasingly strict regulations seeing some businesses pulling out of the pawnbroking industry as a result. Businesses with a licence to offer credit to customers required reauthorisation by the Financial Conduct Authority, a long and arduous process. Before reauthorisation, the NPA had more than 200 members yet now there are only 150. This underlines the tight pawnbroking community in the UK, with a combined loan book of £700m.
Pawnbrokers are also under the watchful eye of the Financial Ombudsman Service, which last year recorded only a handful of complaints of which only a small percent were upheld, suggesting a high level of satisfaction amongst pawnbroking borrowers.
For a free quote on your jewellery or watches, call Hopkins and Jones on 0207 379 7080 or e-mail [email protected]