Recession forces more people to forsake pawned heirlooms

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The Independent Online
AS THE recession drags on, an increasing number of people are finding it impossible to redeem pledges at the pawnbroker's. Favourite pieces of jewellery and family heirlooms that people hoped to wear at Christmas are being lost to pay off debt.

Barry Strong, manager of E A Barker Ltd, pawnbrokers in the City of London, said: 'We have just seen the pre-Christmas rush to redeem special pieces of jewellery which people want to wear over the holiday period. It peaks around the 12th to 15th of December, the last payday before the holiday.

'But we have seen a big increase - 15 to 20 per cent - in the number of people who are having to let their goods go. Others who cannot afford to redeem the goods are just paying the interest to renew their pledge.'

Pawnbroking is one of Britain's few growth industries - business has expanded rapidly over the last five years, thriving on the need of many people for short-term loans. Customers travel from as far afield as Norwich to pawn goods at E A Barker, where the average loan is about pounds 500 but the largest outstanding sum is pounds 40,000. Most transactions involve jewellery, as the days have long past when pawnbrokers would take in pots and pans, bed linen or the Sunday suit. Pawnbrokers are also reluctant to take electronic goods and even cameras, because these items may rapidly decline in value as new models emerge.

Archie Crocket, director of the Glasgow Pawnbroking Company, is an exception; he accepts cameras, binoculars, golf clubs and musical instruments. 'People are looking to borrow more now than they used to,' he said. 'The average person is looking for an extra pounds 100 to take them over Christmas, when it used to be pounds 50. Over 90 per cent come back to redeem their pledge. January is our busiest time, when people need money to pay the bills that come in for Christmas.'

Charlton Edwards, who runs a pawnbroking business in Bethnal Green Road, east London, that was founded by his grandfather, talks of a dramatic increase in custom as a result of the recession.

'The last two years have been phenomenal. The recession is biting very deep now - we are even getting people from the City who are looking for substantial sums,' he said. 'Some are pawning works of art and fancy Italian cars. It is so much quicker than going to the bank and we don't ask any questions.'

In the last year, Mr Edwards has lent money on the security of a Jaguar, two Mercedes, a Lamborghini and a Range Rover. The people involved all had short term-debt problems, but, with one exception, have all returned to redeem their vehicles. 'We don't want to end up with the goods, so we lend only a small portion of the value,' Mr Edwards said. 'But people are finding it harder to repay debts now. Goods are now remaining with us longer before they are redeemed, and we have seen an increase recently in the number of people unable to redeem goods.'

The boom in pawnbroking has led to new types of business. First County Sureties, founded two years ago, specialises in pawning cars but will also pawn property, life policies and share certificates in the top 10 companies. It has even lent a substantial sum on the surety of fishing rights on a Scottish salmon river, worth more than pounds 600,000.

In its warehouses near Weybridge, Surrey, the firm has more than 100 cars, several boats and five jet-skis. There are, however, larger boats in dock, including one vessel worth about pounds 300,000, and a Beech and two Piper Cherokee aircraft.

John West, an executive of First County, said: 'We lend from pounds 1,000 to pounds 80,000 on cars, but we have to be very careful because the value of a car can go down substantially during the period of a loan. We have a lot of expensive cars that people do not want to part with permanently. We try to evaluate what the car is worth and then lend up to 50 per cent of the value. Even so, about 10 to 20 per cent of them are not redeemed. We don't want to be left with them, that's why we restrict what we lend. The more we lend on an item, the greater the chance of us being left with it.'

(Photograph omitted)

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