Stuttgart / Dusseldorf – If you need cash quickly and do not want to take out a loan, you can hand over valuables in a pawnshop. Without credit check and no repayment obligation, there is money directly. There are more than 200 pawn shops in Germany, three of which run municipalities – in Mannheim, Augsburg and Stuttgart.
So far, about one million customers have pledged items this year. For this they have borrowed a total of around 500 million euros. The range of customers ranging from “Citizen A to Entrepreneur Z”, says the Central Association of the German mortgage lending industry (ZDP) in Stuttgart.
Money for little security
Mostly it is people who do not get credit from the bank, explains ZDP chairman Joachim Struck. For example, entrepreneurs, freelancers and the self-employed, who could offer little security. Because unlike the bank, the pawnbroker does not have a credit check – customers only have to present their ID as well as possibly a proof of ownership in addition to the valuable item. There is already money.
Electrical appliances are not worth much, jewelry is common
Loans in the amount of 10,000 euros or 30,000 euros are not uncommon. The average loan is around 300 euros. Basically, customers can lend everything that is movable. In addition to expensive cars, designer handbags and designer belts as well as watches are highly popular. For electronic devices such as mobile phones, computers or TVs, there is usually little money. The reason: the rapid depreciation. Important to know: Tools or company cars are not available during the contract period. Customers can not use them to execute orders. The objects rest unused in the depot of the pawnbroker. However, a majority of people bring jewelry.
Amount of money depends on estimate
How much money there is for Grandma’s gold chain, according to ZDP usually depends on the daily updated precious metal price. For other items applies: The amount depends among other things on the resale value of the things – these estimates the pawnshop.
The customer usually receives 50 percent and less. “Who deposits a car of 100,000 euros, can get to the 50,000 euros,” says Schedl. He justified the high discount among other things, with the storage costs. In addition, there is a risk that an auction will result in an amount below the loan amount.
No liability, no debts
In the case of a pawn loan, the item submitted is considered collateral. “The customer is not liable with his personal assets and makes no debts,” explains ZDP managing director Wolfgang Schedl. If someone does not repay the loan or does not release their pledge, the object will be publicly auctioned. However, according to ZDP, this only happens in ten percent of cases. The proceeds from the auction will be paid to the pawnshop – unless they obtain a higher sum than the borrower has used, then he is entitled to this additional proceeds. The customer has two years to pick up this surplus. After that, the state collects the money. This is how it regulates the State Pawn Loan Ordinance of 1961.
Pawn shops are also online
For some time, pawnbrokers have been offering their services online, such as Valendo, OnlinePfand or Deutsche Pfandkredit AG. The conditions are comparable to those of classic houses. Main difference: The money is usually transferred only when the items has checked an expert in the pawnshop. “Customers ask about the network and get an offer, and when they have agreed, we pick up the valuables,” explains Martin Nett, Chairman of Deutsche Pfandkredit AG.
Expensive loan option
The unbureaucratic loan option has its price. Every month, one percent interest is payable, plus fees. These are up to a loan amount of 300 euros in the Pfandleihverordnung. For higher sums the fees are freely agreed. “Even if it does not look like it at the beginning because of the small sums involved, borrowing an item is an expensive affair,” says Stefanie Laag from the consumer center in North Rhine-Westphalia. Extrapolated to the year, an effective interest rate of more than 40 percent could result. Another risk factor is the one-time fee that consumers have to negotiate with the pawnshop. The process is therefore intended at best for short-term liquidity, says Laag. If you need money in the long term, you should choose other credit options.
Limit loan costs in the pawnshop
Customers should only accept as much money as they really need, advises Stefanie Laag, financial adviser to the consumer center of North Rhine-Westphalia. In addition, they should keep the duration of the Pfandbrief loan agreement short – this way, costs for the loan can be limited. Usual are three months, plus one month grace period. Within this period, customers can trigger the asset at any time by repaying the loan, interest and fees.
Compare the offers
Mostly the contracts include a renewal option. An official maturity cap does not exist. Laag advises to compare the offers of several pawnshops before closing and to consider the valuation of the valuables in addition to the fees.
The pawn shops do not have to inform their customers about due dates. Who wants to have his family silver or his company car so again, should consider the release dates, advise consumer advocates and pawnshops – otherwise things come at the auction under the hammer.