Money: Pawn shops are changing: hock, stock and barrel

Once the dingy refuge of the desperate, pawnbrokers have become mainstream lenders.

Pawning your valuables isn't just for the desperate. It can be a useful short-term fix if you need a loan. And with the school holidays about to start, pawnbrokers are bracing themselves for record business as holidaymakers pawn items to pay for their getaways.

Barry Compton, manager at the Golders Green branch of Wagonmark, says: "There are so many late cut-price deals around that a lot of people decide to go on holiday at the last minute when they haven't been saving up for it. Because we can deliver loans in foreign currencies, they often use us as a bureau de change as well.

"Some people who bring in their jewellery to pay for their holidays are motivated partly by the fact that they know it will be much safer with us than in the home while they are away. Our levels of security rival those of most banks."

The pawnbroking industry nearly died out after the introduction of the welfare state but it has been growing since the early 1980s. Pawnbrokers are regulated by the 1974 Consumer Credit Act and are becoming increasingly mainstream. Many look like bank or building society branches.

Nathan Finch, spokesman for the National Pawnbrokers' Association, says: "We are the people's bank and it would not surprise me to see as many pawnbrokers by 2010 in the high streets as we currently have banks and building societies."

Borrowing from a pawnbroker involves leaving a valuable item as security. This is returned when the loan is repaid. Most pawnbrokers lend only against jewellery and watches but some will take fine art, antiques and even cars.

Loans are normally given for up to a third of an item's value in return for an agreed rate of interest - usually between 3 per cent and 8 per cent a month.

When you hand over your item you are asked to sign a credit agreement and will be given a copy of this together with a pawn receipt. The two are usually combined in one document.

You can get your item back within six months by producing your receipt and paying what you owe under the agreement.

If you don't redeem it within that time and the loan is for pounds 75 or less, then the broker becomes the owner. If you borrowed more than pounds 75, the pawnbroker can sell the item to recover the debt. If the sale makes more than you owe, then the surplus is yours, but you will still be liable for any shortfall if it sells for less than your loan.

Using a pawnbroker isn't a cheap way to borrow. A pounds 200 loan over two months from a pawnbroker charging interest at 6 per cent a month would cost pounds 24 over two months, whereas an authorised overdraft from Barclays for the same loan would cost pounds 15.80, allowing for all charges.

However, not everyone can get an overdraft or can afford the time to arrange one. Pawnbrokers can complete deals within minutes. They require proof that an item belongs to a borrower but do not carry out credit assessments or take references.

Users range from businessmen seeking to raise short-term funds to clinch deals to consumers paying for utility bills, school fees and holidays.

Some pawnbrokers also offer cheque cashing facilities for third party cheques. These are popular with those not considered creditworthy enough to be granted bank accounts but who need to cash cheques relating to wages, inheritances and lottery wins.

Rates of interest on this, as with monthly rates for pawnbroking loans, vary according to the firm and the amount involved and it is well worth shopping around by phone initially.

Most cheque cashing rates for amounts of under pounds 500 are between 5 per cent and 7.5 per cent. You will usually be charged an initial handling fee of between pounds 1.50 and pounds 3.00 per transaction.

WHERE DO I GO?

n Stick to members of the National Pawnbrokers Association (0171- 242 1114) as these have been stringently vetted.

Harvey & Thompson (0800 838973) and Albemarle & Bond (0117- 959 1766) are the two main national chains. Albemarle & Bond only deals with jewellery and high-value watches but Harvey & Thompson will extend to clocks, cameras, guitars and even memorabilia.

TM Sutton (0171-834 0310), in London, will lend against fine art and specialises in larger loans. Its sister company, EA Barker (0171-283 2982), has particular expertise in cuff-links and watches.

East Ham-based Phillips (0181-472 0805) will deal with cars, musical instruments, computers, cameras, helicopters and boats.

n Wagonmark (0181-458 0620), with five branches in London and one in Canterbury, lends against art and antiques, cars worth above pounds 10,000 and designer-label clothing.

Voices
Hunted: A stag lies dead on Jura, where David Cameron holidays and has himself stalked deer
voicesThe Scotland I know is becoming a playground for the rich
News
newsMcKamey Manor says 'there is no escape until the tour is completed'
News
people'When I see people who look totally different, it brings me back to that time in my life'
Arts and Entertainment
Soul singer Sam Smith cleared up at the Mobo awards this week
newsSam Smith’s Mobo triumph is just the latest example of a trend
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
News
news
News
people

Britain First criticised for using actress's memory to draw attention to their 'hate-filled home page'

Arts and Entertainment
A photograph taken by David Redferm of Sonny Rollins
people
News
news

Emergency call 'started off dumb, but got pretty serious'

Extras
indybest
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.

iJobs Job Widget
iJobs Money & Business

Compensation and Benefits Manager - Brentwood - Circa £60,000

£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

Data Analyst/Planning and Performance – Surrey – Up to £35k

£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker