It’s almost as old as money itself but in these dire financial times, Neil Hudson asks if pawnbroking is experiencing a revival.
There’s no denying a certain stigma is attached to pawning goods for cash.
For years, the industry has been seen as a last resort for those deemed ‘at risk’ by the banks or those who aren’t very good with money in the first place. There’s also the misconception that pawnbrokers are used by a certain kind of people and there’s a kind of raw edginess to the business, compared to the gloss and glitter of the ever-so-slick big name financial institutions.
But times they are-a-changing.
The reputation of high street banks is not what it once was, people are more aware of interest charges on overdrafts and when it comes to securing a short-term loan, if you go to a bank, there’s a tangle of red tape to wade through before the cogs start turning.
Not so with pawnbrokers and, according to Albermarle Bond, more people are turning to the industry for low-interest short-term loans.
The Yorkshire Evening Post spent a morning at the company’s Bramley branch and found a surprisingly slick, personal operation.
The shop itself is clean and very neat with the latest in modern security, including high definition CCTV and safes big enough to look like they belong in a Hollywood movie.
I arrive at their shop at 9.30am on Tuesday, 15 minutes before official opening time but already windows are being filled with jewellery and computers warmed up.
To gain access to the rear of the shop, I must pass through an ‘air lock’, a set of double-doors, which, once entered, can only be opened from the other side. It is a security measure designed to deter robbers but, judging by the size of the safes towering at the back of the room, even if anyone did manage to break in, they would be unable to do anything.
Sonya Best has worked at the company’s Bramley branch for three years but has been in the industry for nigh on a decade.
She said: “The safes are on a timer, meaning once they are closed, that’s it, no-one can open them for a certain amount of time. They are pretty impregnable. When the London riots took place, Albermarle Bond’s Croydon shop was burned down but the safe was left standing.”
During our two-hour stint at the store, a steady stream of customers filed through the door, some to pawn objects, others to cash cheques, because they can get at the cash instantly rather than having to wait several days, which would be the case if they did it via a bank.
Far from being something used as a last resort by hard-up members of the public, pawnbroking is increasingly used by professionals.
Sonya said: “We get builders coming in to pawn things, basically so they can pay their men their wages. Rather than go to a bank and have to go through a lot of rigmarole and then wait for the money to come into your bank account, with us we get the money straight away.
“We have a lot of customers for whom pawning things is part of their weekly living – people might not get paid until a certain part of the month but they need money in the short term and so they come to us.
“If they pawn something worth £100, they would pay £7.99 at the end of the month, we would then contact them at the end of six months to discuss how they want to proceed.”
Typically, people pawn items of jewellery, rings, bracelets, necklaces, watches and so on, which are made up of gold, silver or platinum. Each transaction is referred to as a ‘pledge’.
In the past, Sonya has had some somewhat unusual pledges.
“I once had a man come in with a bag of gold tooth fillings. He worked at a dentists and had collected them over a period of time, he thought they were solid gold but it turned out they weren’t worth as much as he was expecting. In the past, I’ve also seen a gold false nail and a gold-plated baby’s dummy.
“Pledges can be anything from a few pounds to thousands of pounds. We once had a diamond necklace brought in and it had diamond teardrops dripping from it and that was pawned for £50,000.”
If you thought pawning things was all Albermarle Bond did, think again – they also repair jewellery and are a bona fide jewellers in their own right – Herbert Brown is part of the same company. They also arrange money transfers to and from other countries.
Sonya added: “We’ve definitely increased our clientele during the recession. We also see an increase in trade when it’s sunny, as people want to go out with their kids.
“I think there was a stigma attached to pawnbrokers but I remember going to one with my grandma when I was younger and I think people are starting to realise it’s a safe way to borrow money.
“At the end of the day, we want to be a sensible lender. We always talk to the customer about how they want to proceed, if we end up selling their item at auction and it makes more than we expected, they get the extra money; we just take out the value of the loan and whatever interest was due.
“But it’s not our intention to sell people’s items, we want them to borrow sensibly and get their items back.”
Louise Savile, 23, who has worked for the company for two years but has been in the industry six, said: “It’s a lot more popular now than when I first started, I remember one man used to come in and pawn his Rolex watch regularly, in order to buy second-hand cars. He was a car dealer and when he needed the money quickly, he would come to us. It was quicker and easier and probably cheaper than going to a bank.”
One woman who used the service, who asked not to be named, was a 41-year-old mum-of-two, who pawned a ring worth £13.
She said: “I need the money to go to Tesco to buy things for my family. I don’t get paid until later this month. I will buy the ring back after that and it will cost me £1.04 in interest. I come here regularly and pawn things. It’s just an easy way of getting cash for me.”
A survey of 2,000 people conducted for the National Pawnbrokers Association in 2010 found a quarter of those asked thought that ‘only people who aren’t very good with money’ used pawnbrokers.
Barry Stevenson, chief executive of parent company Albermarle & Bond Holdings plc, said: “It is a myth people who use pawnbrokers can’t manage their money. Most are very good with money and understand a pawn loan is a great value, flexible, easy and affordable way to get cash when they need it most.
“We have worked hard to change our image – people outside of our existing customer base are starting to recognise the value of the services we offer – it truly is the age of the pawnbroker.
“Since the recession, retail high street rates have returned sensible levels which allows us to be where our services are needed.”
Albermarle Bond plans to open 25 new stores this year, the same as it did last year.
For an industry mired in myth and surrounded by stigma, it’s not doing half bad.