Clare felt she had no choice but to resort to pawning personal belongings. She has become one of the many caught in the rising tide of people compelled to take out loans against their possessions to keep their financial heads above water. These are precious keepsakes I’ve had to part with due to a complete lack of assistance and support, she lamented.
Over the past year, a 25% surge in the number of new loans emanating from pawnbrokers has been observed, according to data compiled by the Financial Conduct Authority. This significant increase demonstrates the escalating scale of the cost-of-living crisis, as people become more desperate, commented Debt Charity StepChange.
Richard Lane, the charity’s director of external affairs, cautioned that pawnbroking will likely only worsen individuals’ financial standing in the long term. People seeking immediate solutions to pressing financial needs are increasingly turning to pawnbrokers, primarily due to stringent regulations on payday lenders.
In a Pawnbroking establishment located in South East London, we came across Mrs. Adams as she was parting with her jewelry. Pawning her wedding, eternity, and engagement rings which bears great significance to her, was a painful decision, she confessed. But with £200 on offer – enough to cover her gas, electricity and food shopping expenses, she felt she had little choice.
She further shared that this was not the first time she was in such circumstances. Rising costs of living had forced her previously to pawn two neck chains and a pair of bracelets. Describing pawnbrokers as her lifeline, she confessed that they presented a swift and accessible avenue to much-needed funds, a better option than getting into deeper debt with loans.
At the same establishment, Nathan Finch, the managing director, claimed to have noted a surge in business due to the cost of living crisis and inflation, an increase seen amongst diverse social classes.
Figures from the Financial Conduct Authority indicate that £440m was loaned to customers trading items within the year leading up to June, a substantial rise from the £351m loaned the preceding year. While the FCA agrees that pawnbroking maybe a viable resort for some faced with persistent financial hurdles, they are committed to enhancing standards in the high-cost credit industry.
A recent report suggested that over 350,000 people resort to pawnbrokers for funds annually. Critics contend that the high interest and undervalued valuations for goods make it less than an ideal solution.
Geoffrey Simmons offered a personal perspective on the matter. The state pensioner began resorting to pawnbroking six years ago to ensure his freezer remained stocked. With a string of around 40 items ranging from £12 to £900, he confessed to having pawned nearly everything to stay on top of his finances.
Although he always retrieves his items before the loans expired, his application for another credit card was dismissed, leaving him to view pawnbrokers as a godsend. There’s always the option of pawning remaining jewelry, offered Mr Simmons, confident in the assistance he would receive.
