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Planning Retirement Online

Three balls to money

October 2011  

PawnbrokerPawnbroking is back! 100 years ago and earlier pawnbroking was a very common activity – in fact at the end of the 19th century there were almost as many pawnbrokers in the UK as there were pubs! However, the idea fell from favour in the middle of the 20th century and it is only in recent years that they have started to thrive once more.

Pawnbroking – or borrowing money in return for depositing anything from family silver and jewellery to bedlinen and cutlery – has a very long history and was taking place as far back as 3,000 years ago in the Far East. In Europe it enjoyed a surge when, in the fifteenth century, the noble Medici family in Italy became involved in pawnbroking, making it respectable. Interestingly, it is due to the Medici family that the famous sign of pawnbrokers – three golden balls – came into being. One half of the Medici family split away to become bankers and took half the family crest with them. The pawnbroking side of the family were left with the other half which included three gold balls.

Really pawnbroking is just a different way of borrowing money from going down to your high street bank. It is usually more popular in times of a recession when banks may be turning down loan applications from customers. It can also be very useful for people who have a bad credit record. Currently pawnbrokers are reporting a surge in interest from ordinary people who often want to borrow only small amounts of money to tide them over for a short time. However, amounts involved can vary from just a few pounds to tens of thousands of pounds.

How does it work? Well, if you want to loan a pawnbroker a ring, for instance, for £500, the pawnbroker will examine the ring and make a quick valuation of it. He will then give a repayment rate which will include interest on the amount loaned, and can also reflect the length of time the money is required; the usual minimum time of a loan is six months.

Today pawnbrokers are controlled and once this amount has been agreed the pawnbroker will present a customer with a document called pre-contract information. If all the terms are acceptable, then the customer can sign the actual agreement. This is an A4 document which details rights and also protection under the Consumer Credit Act of 1974.

Then the customer can take away the money and the pawnbroker keeps the goods. When the loan and interest are paid back, the customer can regain their property.

There are various rules now regulating pawnbrokers activities. For instance, the myth that they simply keep the goods if the loan is not repaid is not true. The customer has to be served with various warnings and opportunities to redeem the goods, but if this hasn’t brought results, the pawnbroker must serve notice of an intention to sell and then obtain a true market value on the items. When the sale goes ahead, if the proceeds are greater than the amount due, then the balance has to go back to the borrower.

It really is a long way from backstreet money lending and most modern pawnbrokers are very efficient, well run businesses. Even their shops are today more like a bank than a “shop”, with modern furnishings and professional, discreet staff.

For more information, there is a National Pawnbrokers Association of the UK (visit
or just pop into a high street pawnbrokers who will be happy to explain more fully how the system works. There are several chains today such as Cash Converters, or The Money Shop, with branches across the country.

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