Stuttgart (dpa / tmn) – pawn shops often have a somewhat dubious reputation. There people cash in their last pieces of value because they can no longer get a loan from the bank, according to a common assumption. But the reality is often different.
The pawnshop, which is over 300 years old, is by no means just something for poor or over-indebted customers. Pawn loans have their place alongside bank loans and overdraft facilities. After all, business runs according to clear rules that give consumers security.
Nevertheless, you should know what you are getting yourself into: “Anyone who is toying with pawning their jewelry, expensive china, expensive camera equipment or even their car for some time must bear in mind that a pawn loan is very expensive compared to the typical bank offers.” says Roland Stecher from the Bremen consumer center.
Pawnbroker makes non-binding offer
Almost everything that is valuable is lent: gold and silver jewelry, gold coins and bars, branded watches, branded bags, high-quality technical equipment, kitchen appliances as well as valuable porcelain or art objects, informs the Central Association of the German Pfandkreditgewerbes (ZdP).
If the customer presents his pledge, the pawnbroker assesses the thing and makes him a non-binding loan offer. If he agrees, the lien will be handed over to him and the loan will be paid out in cash or transferred at the cash desk. The deposit will be taken into custody.
Fees are sometimes negotiable
The interest on a pawn loan is the same in all pawn shops. They are regulated by law and amount to one percent of the loan amount per month or part thereof for the entire month. In addition, there are fees for appraisal, storage and insurance of the values deposited as security.
For a sum of 500 euros, for example, five euros in interest and 15 euros in other fees are due after one month. “After all, that is a cost of 48 percent for one year,” says Roland Stecher. “Even the most expensive overdraft facility at the bank is significantly cheaper.”
However: the pawn loan has systemically higher costs, for example for the estimation of the value, the storage and insurance of the pledge, which are individual services and must be remunerated, explains Susanne Rothfuss-Wamsler, chairwoman of the ZdP. The fees are also not a fixed amount, but are freely negotiable from a loan of 300 euros.
Calculate the pawn loan well
Consumers should therefore calculate exactly in which period the costs are still acceptable for them. Leaving a deposit in the pawn shop for longer is expensive. “Then you’d better negotiate an installment loan with a bank,” advises Stecher.
But if all possibilities to get a loan from the bank have been exhausted and the overdraft facility has already been exhausted, the pawn loan can be a way to get cash at short notice. “It is better to ask the family about a loan beforehand if the man is needy,” says Roland Stecher.
A deposit is sufficient for a loan
But there are also people who go to pawn shops without financial need. “They appreciate the uncomplicated handling,” says Susanne Rothfuss-Wamsler. In contrast to a bank loan, it is not the customer who is responsible for repaying the loan, but the pledge. Therefore the personal, economic and financial circumstances of the customer do not have to be checked. “All you need for a pawn loan is the pledge and your ID card.”
A pawn loan has a short term, but can be extended. The customer has three months plus a further waiting month to repay the loan and to redeem the item. If the consumer cannot redeem the pledge after four months, it must be auctioned within six months, unless the pledge agreement has been extended.
Auctions are relatively rare, however, because more than 90 percent of the pledges are released again, explains Susanne Rothfuss-Wamsler. “This shows that the majority of the pawn loan is used as it is intended, as an unbureaucratic and alternative source of finance in the event of unexpected liquidity bottlenecks.”
© dpa-infocom, dpa: 210721-99-466462 / 2
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