As a result, pawnbroking, which offers instant short-term loans on valuables such as jewellery, gold and watches, has experienced a resurgence.
The industry is growing by 10% a year with a new shop opening every week in the UK, according to the National Pawnbrokers’ Association.
This trend is supported by statistics from pawnbrokers The Money Shop, which plans to open a further 50 Money Shop Pawnbroker stores this year, creating around 330 new jobs.
The short-term lender has reported that it has witnessed its busiest January to date, and this trend looks set to continue well into February as customers struggle to stretch pre-Christmas wages and pawn valuables to free up cash.
Commenting, Neil Surgenor, head of pawnbroking at The Money Shop, said: “We have witnessed an influx of people who have been refused credit by their banks and are unable to take out unsecured loans.
“The difference between pawnbroking and other short-term loan solutions is that customers view it as borrowing from themselves.
“In fact, 80% of our customers come back for their pawned possessions.
“Of those that default on their loan, any money made over and above the cost of the item and the interest owed, once sold at auction, is returned to the customer.”
Pawnbroking & Equity Release
What Is Equity Release?
Equity release is the use of financial arrangements that provide the owner of a house, or other property, with funds derived from the value of the property while enabling them to continue using it.
How Does Equity Release Work?
Equity release is aimed at homeowners aged 55 and over. It allows you to take some of the value of your home as cash.
Pawnbroking to payable Equity
Any residual equity payable is also a debt due to the person who pawned the goods. The customer can sue to recover the money, whether or not the endorsed pawnbroker is prosecuted for failing to pay the residual equity.