Pawnshops have always remained a hallmark of British High Street, but there’s no doubt they’ve been out of fashion for a while. Many in the industry attribute this to the more widespread consumer credit from the mid-1980s to today. However, the pawnshop began to recover significantly. According to one of the UK’s leading pawnshops, in 2022 alone, the amount of credit consumers seek has increased by 17% and they have borrowed more than £10 million more than in the previous comparative period.
When you consider that this is a figure for just one pawn company, you will soon realize that the demand for pawnshops isn’t just growing, it’s undergone massive changes in recent years. In fact, many pawnshops say that the global financial crisis of 2008 changed the mindset of many people seeking credit in the UK. Banks and other large retailers are starting to worry that they will not be able to repay each other due to lack of liquidity, and are starting to lower their exposure to risk by rejecting loans from many. In some cases, people with good credit were turned down entirely on loans, while others were forced to pay at rates much higher than expected before the collapse.
So there is an entire generation of borrowers who are far more comfortable using portable assets like audio equipment, jewelry, and watches to secure credit than they did in the 1990s and early 2000s. More clearly, the more recent cost of living crisis caused as a result of changes in UK-European trade relations, the Ukraine war and costs associated with the epidemic, has led to an increasing number of people who have never visited. The pawnshop is doing just that now. So, despite the broader picture that pawnshops are more interested in this form of credit, it’s not surprising that they’re seeing a dramatic rise in business lately.
It should be noted, however, that tightening household finances is not the only reason why more people are turning to the industry to meet short-term loan demand. This is because many people trust high street pawnshops in ways they don’t when it comes to visiting lenders and more reputable establishments. According to Bonds of Brentwood, a well-known pawnbroker, many customers who use the service no longer want to enter into loan agreements with large lenders because they worry about the consequences of not being able to meet all their repayments. . The same goes for loan sharks and other sources of credit.
But generally speaking, people feel more comfortable when they put up something as collateral for a loan. This tends to work in one of two ways. First, they know they can get a good loan even if they can’t repay it. In other words, the security they provided means you won’t face the prospect of being unable to repay your loan. Second, they often report that pawnshops offer better terms than other credit sources because they are loans backed by something of value. Therefore, pawnshops are considered more reliable and cost-effective compared to other possible methods of borrowing today.
Another aspect of an increasing number of people turning to pawnshop services to make money when a month is long or unexpected expenses arise is undoubtedly the rising cost of goods and services. In the past, if someone at work had to fix a car to make a living, for example, it may not have been necessary to pawn rings or musical instruments for a month or so just a few years ago, for example.
But these days, people with regular incomes are asking for credit for these situations that they may have previously treated as savings. This is because today a much higher percentage of household income is allocated to necessities. Food, rent and energy are just three examples of where you spend the most money. So when energy rates start going up this fall, far more people will likely turn to pawnshops for short-term loans.