HARD-UP households are selling off sentimental items at heavily discounted prices in a desperate bid to stave off the cost of living crisis.
Pawn broker James Constantinou, former star of TV show Posh Pawn, told The Sun he’ s seen a huge increase in the number of desperate families flogging their treasured possessions to scrape cash together.
Pawnbrokers will typically loan you money in exchange for your valuables and charge you interest until it’s paid back.
You can get the item back if you repay the loan and interest on time – otherwise it will be sold.
If you decide you want your item back, you’ll have to pay a far higher price for it than you originally sold it for.
You also generally have to pay a pawnbroker a higher rate of interest than you would for a mainstream bank loan, but it would normally cost you a lot less than a payday loan.
James launched his own pawnbroker business in East London after appearing on the Channel 4 series Posh Pawn.
But now he runs a pawn shop where he encounters vulnerable families bringing in their valuables because they are struggling with the rising cost of living.
He’s seen a “record” number of people bringing in personal items to fund rent or mortgage payments and basic bills.
“We’ve seen the number of calls and people coming in has been quickly gathering pace since the pandemic,” he said.
“They are now at record highs, and the type of stories that we’re hearing are quite shocking, with people giving up family treasures.
“People are becoming more and more desperate to get their hands on cash”.
James said he recently saw one desperate woman come in with her grandmother’s diamond engagement ring to try to raise £40,000 after losing her job.
She was raising money to help stop her mum losing her home as she could no longer afford to pay her bills.
Another customer going through a divorce brought in all her jewellery to raise £5,000 to rent a flat for her and her kids.
In the end, she sold a gold bracelet set and a diamond necklace and managed to get a loan of around £7,000.
“The last time we’ve seen desperation like this was after the 2008 crash, it’s very much that feel at the moment,” James said.
The items people are flogging to raise extra cash has become so eclectic, he said, that he has now amassed some rare items and has set his store up like a gallery.
“For example, someone recently sold us some very personal letters from Brian Jones from the Rolling Stones from when he was a teenager,” he said.
One of the big trends James has seen lately is households shedding their gold jewellery, as it always tends to sell for a significant amount.
“You always get a run on gold and people tend to get rid of their gold assets,” he said.
“We probably buy gold jewellery for around £400 for every customer that brings it in.”
However, he said he has seen a number of people bringing in luxury items they bought in the past expecting them to be worth a lot, only to find they have not held their value.
For example, the price of a Rolex watch soared in the pandemic from between £5,000 to £10,000 up to £20,000 maybe even £30,000, and a lot of people invested in them while they had more spare cash.
However, luxury watches have fallen in price and people are finding themselves lumbered with expensive items they can’t flog, even though they’re now in need of cash.
“Luxury watches aren’t a commodity like gold – the value fluctuates a lot more and if you bought it in the pandemic it’s most likely worth a lot less,” James said.
It’s also important to bear in mind many luxury goods use their naturally value over time.
If it’s been kept in good condition, people often won’t be able to tell the difference between a new and secondhand.
A pawnbroker can be a quick way to access cash if you're struggling, but you're rarely getting the best deal.
The value of items can go up and down, but pawnbrokers will only make you an offer based on the value of the item at the time you are selling it.
Pawnbrokers may offer you less money than you might be able to get for the item elsewhere.
Most won’t take your credit score into consideration, so they may be more likely to lend you money than a mainstream lender, but they will also charge a much higher interest rate.
You can usually only borrow a percentage of the value of the item you want to pawn.
If you can’t pay back the loan, there is a chance you will not get the item you pawned back as it will be sold on.
If you have a disagreement with the pawnbroker you can take a pawnbroker to the Small Claims Court but there are fees to pay and there’s a risk the settlement reached might not be what you want.
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