Dispelling the myths of pawnbroking
Although pawnbroking has been around for thousands of years, many people still don't really understand what it's all about. Negative misconceptions are commonplace, yet the reality often paints a completely different picture. Here, we separate fact from fiction and dispel many of the popular myths related to pawnbroking.
Only dodgy types of people use pawnbrokers
One of the biggest misconceptions about pawnshops is that they are sleazy and frequented by undesirables. This isn't the case at all. In fact, people from all walks of life use a pawnshop, in much the same way that all sorts of people apply for a loan from a bank. Many of the people who need instant cash from a pawnbroker often have unexpected bills or expenses to pay, and are normal, regular people. They aren't using pawnbroking services for shady, undercover dealings.
Using a pawnbroker is something to be ashamed of
Pawnbroking often invokes images of people fallen on hard times, and pawning items is commonly viewed as a last-ditch attempt to borrow some cash. For this reason, using a pawnbroker is often regarded as something to be ashamed of.
The reality is quite different, however. Most people who use a pawnbroker have a steady income and are in employment, but may be short of savings, or need instant cash, for an unexpected expense. It's estimated that around 2.5 million people in the UK have used a pawnbroker, so you're not alone.
Most people using a pawnbroker are able to pay the loan back and redeem their pawned item. People pawn items as a way of securing a loan. Since most of us have obtained a loan from a bank or other financial institution in one form or another during our lives, there is nothing really that different (or shameful) about using a pawnbroker in this way.
If the thought of entering a pawnshop makes you feel uneasy, there are alternative options to consider. You could deal with a pawnbroker online, for example. Many jewellery stores, such as Albone, also offer pawnbroking, so you can ensure a discreet service when you pawn your belongings at this type of shop.
You'll end up buying stolen goods from a pawnshop
A pawnshop isn't a haven for stolen goods - far from it. It's not in the pawnbroker's interest to sell knock-off or stolen gear, as this puts them at risk of landing in trouble with the law and losing their license. A pawnbroker will scrutinise a pawned item, including taking serial numbers, to check authenticity before accepting it. Pawnbrokers have to follow strict regulations and codes of conduct in the way they operate, and they work together with law enforcers to report any stolen items.
Most people lose their pawned items
It's a common notion held by many that people who pawn their family heirlooms or other valuable items aren't able to pay the loan back, and they end up losing their treasured possessions. Fortunately, most people don't experience this situation. Research has shown that nearly 90% of people redeem their pawned item and are able to repay the loan on time.
Pawnshops lower the tone of a high street
A lot of people don't like the idea of having a pawnshop on their doorstep, and some might go as far as believing that it lowers the tone of a neighbourhood, even impacting on property prices. A pawnshop is, however, not that dissimilar to a bank - it provides customers with a loan. Yet most of us wouldn't think negatively about having a bank nearby. Far from being sleazy, run-down, dimly-lit shops, most pawnbrokers operate from a bright, well-maintained store that's often part of a reputable establishment, like a jewellery shop.
A pawnbroker profits from selling pawned items
It's often thought that the main aim of a pawnbroker is to part people from their pawned possessions, so they can sell these items and earn a tidy profit from doing so. Actually, most pawnbrokers don't operate this way. They want to work with the customer to help them redeem their items. The pawnbroker's goal is to make a profit from the loan they offer to customers, rather than from selling pawned goods. For this reason, customers are generally offered favourable terms and conditions to suit them, that enable them to repay the loan accordingly. Even during the loan period, the pawned item belongs to the owner.
You'll get ripped off using a pawnbroker
Whatever loan you take out, you're subject to paying fees and charges. Pawnshop loans differ in nature from many loans you get from high street banks, as they tend to be short-term transactions. For this reason, you usually pay more interest with a pawnshop loan, but you generally pay less interest compared to similar short-term loans, such as payday loans.
Bear in mind, that pawnbrokers are regulated by the Financial Conduct Authority, which means they're obliged to be fair and honest. In the unlikely event that you are being ripped off, you have the right to complain to the Financial Ombudsman Service.
It's reassuring to note that 95% of people who have used a pawnbroker are satisfied with the services they received, so problem encounters only account for a very tiny minority.
Pawnbroking is only for small amounts of cash
A common myth is that pawnbrokers only deal with small items of cash value, but this isn't always the case. Pawned items can vary from a ring worth a hundred pounds to a luxury Swiss watch with a high-end price tag commanding several thousand pounds. And, it's not just jewellery that pawnbrokers deal with. Pretty much anything of value will be considered by a pawnbroker, including designer goods, works of art or even sports cars. Having said that, if you are pawning jewellery, it is often a good idea to use a renowned jewellery business that offers a pawnbroking service, such as Albone, to ensure you are dealing with someone who is an expert at making accurate valuations.