Secured and unsecured loans from leading lenders in the UK.

<< back

Pawnshops Make A Comeback

Pawnshops are making a comeback. Here's why. Instant cash, with very few questions asked. Compare that to the cumbersome vetting process for other forms of credit.

If you want a loan, credit card, store card or other form of credit you usually have to fill out a detailed form with your name and address, employment and salary details, other credit cards and other information designed to find out your financial history.

And no matter what you put on that form, there's no guarantee that you'll get the credit you're looking for. After all, there's still the credit scoring process to go through. And some of those criteria might be impossible to match. If you're young, unmarried and living at home, you could get turned down for credit in spite of a blameless existence, so it's no wonder that many people are choosing to avoid the hassle and go back to an ancient, tried and true method of getting credit.

Pawnshops have been around for thousands of years and were popular in Britain in the late 19th and early 20th centuries. Tighter financial circumstances in the late 20th century made them popular again, especially for people with poor credit ratings.

Pawnshops work like this. A borrower gives an item as security (such as jewellery) and gets cash. The borrower repays the loan to redeem the item. These days, borrowers have to prove their identity and address and sign a six month loan agreement, but the process remains relatively simple.

The UK now has about 850 pawn shops, with the two largest chains being Albemarle and Bond and Harvey and Thompson. Many of these are members of the National Pawnbrokers Association and are registered under the latest Consumer Credit Act.

Although interest rates can be high (with APRs well over 100% in some cases), they still compare well with those of doorstep lenders, so pawning can be a good option for handling occasional expenses. Loan amounts are often small and most people redeem their items within six months.

Although many people think that pawnbrokers are happy to sell goods if people don't turn up, most pawnbrokers want people to collect their items. They make money from the interest and don't have to have the bother of selling an item.

The items you can pawn depend on the location. Jewellery (especially gold) is popular, but some pawnshops accept antiques, electronic goods, valuable watches and even works of art.