Pawnbroking is a profession that’s shrouded in myth, thanks largely to depictions of it in fiction. When pawnbrokers appear in television or film, they tend to be a vehicle for the plot to move forward – the profession involves high-value assets, of course, and so characters are often motivated to descend upon it.
Fictional pawnbrokers tend to be disreputable, in a way that their real-world counterparts rarely are. It’s worth taking the time to separate fact from fiction, and to debunk a few of the persistent myths that surround this trade.
Pawnbrokers Are Only for the Desperate
You might assume that the only reason a person would pawn something is out of desperation. The image of the destitute housewife pawning her prized engagement ring is a persistent one.
In reality, pawnbroking often helps people to part with assets that have limited sentimental value, in exchange for a short-term cash injection that’s far less risky than an unsecured, high-interest loan.
Pawnbroking Is Unregulated and Risky
In the UK, pawnbroking is overseen by the Financial Conduct Authority, in much the same way as banks and building societies. If you take out finance from a reputable, licensed pawnbroker, then you’ll have the security of knowing that you’re safeguarded by the Consumer Credit Act 1974.
You Lose Your Item If You Can’t Repay the Loan
Pawnbroking is a form of secured finance that works via collateral. The pawnbroker doesn’t, however, automatically take ownership of the item being pawned in the event of a default. In many cases, the debtor will have the opportunity to extend the loan, or renegotiate terms. After all, it’s often in the interest of the pawnbroker to get the money they’re owed, and perhaps to agree another loan in the future.
Pawnbrokers Always Offer Low Loans for High-Value Items
The truth is that pawnbrokers are fairly objective and willing to consider items based on their market value. This means assessing the condition, rarity, and demand for the item. Pawnbrokers might not always be able to do this accurately and will often err on the side of caution. However, the value of the loan offered is usually quite reasonable.
Pawnbroking Is Just for Jewellery
Pawnbrokers will usually deal in items that can be easily transported and sold. Jewellery fits firmly into this category, but other items, like consumer electronics, clothing, antiques, and musical instruments, might also be pawned. Whatever assets you have to hand, the chances are good that they can be turned into a secured loan at short notice via a pawnbroker.
