When the bank is bare ...

Pawnbrokers are a useful fall-back for raising money in an emergency, if an overdraft is out of the question. By John Andrew

Raising money in an emergency can be difficult. Last week, we discussed the options available to Hazel, who was wondering how to proceed if she wanted to dispose of a family heirloom.

A few years ago, Hazel inherited a piece of jewellery from her aunt. Single and retired, she is reasonably comfortable financially, with a company pension to supplement her state pension. She also has "adequate" savings and investments that produce an income which she uses for holidays abroad.

There are three possibilities: to consign the piece to auction; to sell it direct to a dealer, or, if she were unsure whether she really wanted to sell the brooch, but still needed cash while she made up her mind, she could borrow against the piece from a pawnbroker.

We decided on TM Sufton's, opposite London's Victoria Station, which has been described as the Harrods of pawnbrokers. We were led through a back door to Jim Tannerhill's office.

"Beautiful, beautiful, beautiful," he remarked as he looked intensely at the piece. He knew it was by Faberge and appreciated the craftsmanship. "We normally see large chunks of jewels; nothing like this. How much do you want?" We suggested pounds 5,000 and received the response, "No problem, though I will have to go through the normal formalities such as identification, and a consumer credit agreement. If you wanted more, I would need a couple of days to get a professional valuation."

Then came the crunch question, "What is the interest rate?" Sufton's tariff is 5 per cent a month for pieces under pounds 500; 3.5 per cent for advances from pounds 500 to pounds 10,000 and 3 per cent for sums above pounds 10,000, with amounts over pounds 100,000 negotiable. When asked the APR for an advance of pounds 5,000 Jim responded immediately, "46.4 per cent". As Hazel was a good credit risk, borrowing from a bank would be two-thirds cheaper for her. However, as Jim pointed out, this is not an alternative for everyone who wants immediate cash for a short period.

Certainly when he showed us around the vaults, one was in no doubt that the asset-rich but cash-poor use pawnbrokers to help their monetary liquidity. A diamond tiara lay in the inner sanctum, while close by in a locked cupboard there were jewels on which sums of up to pounds 250,000 had been advanced - rare, coloured diamonds of several carats, and an emerald the shape of a small pear and as large as a man's thumb.

I was intrigued as to what happens to items that are not redeemed. This occurs to fewer than 10 per cent of the items pledged to Sufton's. While the company accommodates individuals who have funds "on the way", when it is apparent that customers are not going to honour their side of the pledge agreement, they are advised when their treasures will be consigned to auction, which in many cases will nudge them into redeeming the pieces they have pledged. The net proceeds, after Sufton's has taken the interest it is due, are forwarded to the client.

We decided that raising cash with a pledge at a pawnbrokers was not for Hazel. However, for an individual who is really hard pressed for cash, and where a bank overdraft is not a possibility, a pawnbroker's is a viable option. The National Pawnbrokers Association has 240 members, and Paul Finch, of the association, estimates that there are around 600 pawnbrokers in the UK.

When I remarked to him that I was taken aback by the APR on advances, he made the valid point that the APR for an overdraft includes interest only and not fees for unauthorised overdrafts, charges for letters on the state of the account and the fee made every time a cheque is bounced.

Hazel's heirloom was clearly a thing that would have had the experts on the Antiques Road Show drooling. However, if you want to sell any heirloom, it is essential to do your homework first. Had Hazel not appreciated the value of the piece and known nothing about it, she could have sold it for a song to a person who also did not appreciate its true worth. So just as you shop around when buying anything, do not rush when selling. Of course, do remember that not all antiques are worth a fortunen

The National Pawnbrokers Association publishes a list of its members and a booklet on pawnbroking. Any item of value is normally suitable for pawning (which is when the loan is below pounds 50) or pledging (when it is for pounds 50 or more). Call 0171-242 1114 for more details.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Voices
On the last day of campaigning before the polling booths open, the SNP leader has written to voters in a final attempt to convince them to vote for independence
voicesIs a huge gamble on oil keeping the First Minister up at night?
Sport
A 'Sir Alex Feguson' tattoo
football

Arts and Entertainment
Liam Neeson said he wouldn't
tv

Liam Neeson's Downton dreams

Voices
voicesApple continually kill off smaller app developers, and that's no good for anyone
PROMOTED VIDEO
Arts and Entertainment
Ben Whishaw is replacing Colin Firth as the voice of Paddington Bear
tv

Thriller is set in the secret world of British espionage

Life and Style
life

News
ScienceGallery: Otherwise known as 'the best damn photos of space you'll see till 2015'
Travel
travelWhy Japan's love hotels are thriving through an economic downturn
Life and Style
fashion

Bomber jacket worn by Mary Berry sells out within an hour

Life and Style
Alexander McQueen A/W 2014
fashionPolitics aside, tartan is on-trend again this season
Arts and Entertainment
Rapper Jay Z performs on the Pyramid Stage at Glastonbury in 2008
musicSinger sued over use of the single-syllable sample in 'Run This Town'
Sport
Joel jumps over the board...and into a giant hole
footballFrom joy to despair in a matter of seconds
News
i100
Arts and Entertainment
Pointless host Alexander Armstrong will voice Danger Mouse on CBBC
tv

Much-loved cartoon character returns - without Sir David Jason

Arts and Entertainment
Meera Syal was a member of the team that created Goodness Gracious Me
tv

Actress to appear in second series of the hugely popular crime drama

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Head of Audit

    To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

    Audit Manager Central Functions

    To £85,000 + banking benefits: Saxton Leigh: You will be expected to carry out...

    Credit Risk Audit Manager

    Up to £90,000 + benefits: Saxton Leigh: Credit Risk Audit Manager required to ...

    Day In a Page

    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    Exclusive extract from Janis Winehouse's poignant new memoir
    Is this the role to win Cumberbatch an Oscar?

    Is this the role to win Cumberbatch an Oscar?

    The Imitation Game, film review
    England and Roy Hodgson take a joint step towards redemption in Basel

    England and Hodgson take a joint step towards redemption

    Welbeck double puts England on the road to Euro 2016
    Relatives fight over Vivian Maier’s rare photos

    Relatives fight over Vivian Maier’s rare photos

    Pictures removed from public view as courts decide ownership
    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    Donatella Versace at New York Fashion Week