Recession Proving To Be Good News For Pawnbrokers
People living in the UK are feeling the pressure of the current economic down turn at the moment, as everybody seems to be being careful about what they are spending and trying to make their money go as far as possible.
This seems to be also true for the major high street banks and other loan companies, all of whom are still extremely reluctant to offer new personal loans to individuals unless they have a perfect credit history and even then, the high level of fees and interest rates charged by lenders in the current market is often enough to put off potential borrowers.
As consumers search around for alternative forms of funding to the traditional bank loan route, Pawnbrokers seem to be enjoying a boost to their business, as many individuals looking for a personal loan are starting to use their services rather than endure the tight lending criteria and expensive interest rates associated with a loan from their own bank.
With a Pawnbroker, a customer is able to take a personal loan out in exchange for their own personal goods, with the items being used as security for the loan. If the loan is not repaid within an agreed time period, the goods are sold by the broker and the borrower keeps the cash. Very often, the personal goods used to secure the loan are gold and with recent increases in the price of gold, pawnbrokers are enjoying a boost in their profits, with one broker, Albemarle and Bond, seeing an 8 per cent increase in their share price.
David Kuo of the financial website Fool.co.uk commented on the change. He said “Recessions can often be good news for pawnbrokers and a trading update from Albemarle and Bond highlights why. It is reaping the benefits of going where banks fear to tread. It expects profits to be ahead of expectations thanks to the higher price of gold that has boosted the return on unredeemed loans. But worryingly for consumers, it is expanding its network of UK stores.”
