Pawning is the new wag accessory
Filed under: Debt
So why are the wealthy turning to pawning their belongings, and what sorts of things are ending up in the hands of the lenders?
Why pawn?There are any number of reasons why the well-heeled may find themselves with a cash shortfall. In the current environment, bonuses are thin on the ground, and some have grown to rely on them. They may assume a big bonus will pay the Christmas bills or for the summer holiday. When it doesn't materialise they need the cash in a hurry, and they have the assets just lying around to be taken advantage of.
In some instances, the problem is more endemic, as the problem has cropped up after redundancy. Rather than make any immediate changes, these households are hanging on for the short term in the hope that the breadwinner will find another well-paid job soon. This sort of position means it's unlikely a traditional lender would consider a loan, so the assets are called into play again.
Another group which is particularly at risk is the self employed. Their income tends to fluctuate anyway as their workload and the reliability of paying clients varies. As financing for small businesses has dried up through traditional methods, they are considering pawbroking.
Research from borro revealed that in the good times this group accumulated and spent their wealth, owning on average £54,900 of non-financial assets such as cars, fine art and antiques. It leaves them asset rich and cash poor, and ideal customers for the pawnbroker.
Top 10 reasons for using borro1 - Facilitate a business transaction or opportunity (23%)
2 - Top up / Bridging finance (14%)
3 - Personal Cash flow issues (13%)
4 - Holidays (11%)
5 - Unexpected bills and fees (11%)
6 - Surveys and other fees relating to property refinancing (10%)
7 - Supporting an irregular income (8%)
8 - Paying tax bills (5%)
9 - School fees (3%)
10 - Funding for probate (2%)
Rise and riseBusiness is booming. Paul Aitken, CEO of borro, says: "Our average loan value has increased to £5,000 with the majority of loans being against diamond jewellery, luxury watches, prestige cars and fine art. We have seen a huge rise in the number of high-value assets stored at our vaults and specialist storage facilities, including luxury cars such Aston Martins and Porsches."
The Telegraph recently published a list of 10 typical items pawned by borro customers:
1. A 5ct round brilliant-cut diamond ring, set in platinum and yellow gold - in return for a loan of £140,000
2. A Porsche Cayenne Turbo - for a loan of £110,327
3. A Patek Philippe Sky Moon Auto watch - towards a loan of £105,000
4. A Ferrari 430 - for a loan of £110,000
5. Rolls-Royce Ghost V12 - for a loan of £140,000
6. A Henry Moore sculpture - for a loan of £100,000
7. A 14ct single stone brilliant-cut diamond ring - for a loan of £100,000
8. Still life oil on canvas - for a loan of £100,000
9. A collection of luxury watches - to borrow £96,000
10. Two 1kg gold bars - for a loan of £58,360