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Friday 19 September 2014

Know your ground before you pawn off the family silverware

Published 10/08/2014 | 00:00

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PAWNBROKER: Pat Carthy at his shop on Marlborough Street
PAWNBROKER: Pat Carthy at his shop on Marlborough Street

Lamborghinis and mini-submarines are the last thing you'd expect to see someone walk into a pawnbrokers with - but if we follow in the footsteps of some of our wealthy neighbours in Britain, it could only be a matter of time before we do so.

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The Channel 4 TV show, Posh Pawn, has uncovered the hidden world of high-end pawnbroking in Britain, where the rich have pawned luxury motor homes and cars, designer handbags, helicopters and mini-subs to get short-term funding for business ventures or personal crises.

Such high-end pawnbroking doesn't yet happen in Ireland, according to Pat Kearns, managing director of Kearns Stockbrokers in Dublin's Smithfield.

Most of those using pawnbrokers here are pawning jewellery. As pawnbrokers are choosy about what they'll accept, any jewellery you're considering pawning must be up to scratch.

"We don't take the goods we used to take years ago," said Pat Carthy, director of Carthy Pawnbrokers in Dublin city - a traditional pawnbrokers which is more than 60 years old. "Now we're very choosy. If we're left with the goods, it's very hard to sell them. It's mostly jewellery that we're interested in. It's gold that we take."

Kearns Pawnbrokers, which has been in business for about 100 years, accepts "jewellery mostly - and some guitars," said Kearns.

Pawnbrokers won't be interested in fake goods. Similarly, pawnbrokers will not accept stolen goods as they'll lose their licence if they do so. Pawnbrokers have access to police records of stolen goods. They have a duty to seize stolen goods when shown them - and to notify the Gardai.

When you pawn something, you get a loan from a pawnbroker and you offer a personal item as security. As long as you repay that loan within a certain amount of time, you get your item back. Otherwise, the item is sold at public auction. "Most people repay the loan and get their items back," said Carthy.

In Ireland, you typically have four months to repay a loan when you pawn something. "The contract is for four months but it can be renewed," said Kearns.

Be sure you know the interest rate charged on the loan before you pawn something. Carthy Pawnbrokers charges 3.25pc interest monthly while Kearns charges 2pc interest.

So if you pawn a ring for €100, it would typically cost between €102 and €103.25 to repay the loan after one month. Repay the loan after four months and it will cost between €108 and €113 to do so. The longer you take to repay a loan taken out from a pawnbroker, the more expensive the loan will be. Take a year to repay a pawnbroker's loan and the interest rate could be as high as 39pc.

You can repay your loan at any time as long as your contract has not expired - in which case, your item may already have been sold off at auction.

There could be other once-off fees when you first take out a loan. With Kearns Pawnbrokers for example, there is a one-off fee of €5 known as a "saver's charge".

Although the loans taken out by people who pawn goods usually run into a few hundred euro, they can sometimes run into the thousands.

Those interested in buying something which someone has pawned will only be able to do so if that item is sold at public auction. You can request that a pawnbroker lets you know if and when an item goes to auction.

The consumer watchdog, the National Consumer Agency (NCA), licenses pawnbrokers. The are only six licensed pawnbrokers in Ireland. Five of these are based in Dublin, the other in Cork.

The NCA said it has not received any complaints from consumers against pawnbrokers over the last year.

"If a consumer has an issue with a service provided by a pawnbroker, they should first discuss the matter with the pawnbroker, to determine if it can be resolved," said a spokesman for the NCA. "If the consumer is still not satisfied, and feels that he has a valid complaint, they can contact the Agency on 1890 432432."

Anyone who runs a pawnbrokers must have a licence to do so. Pawnbrokers are regulated under the Consumer Credit Act 1995. This Act forbids pawnbrokers from operating as bookmakers, moneylenders or auctioneers. Similarly, pawnbrokers cannot hold a gaming licence or a licence to sell alcohol. "A prospective pawnbroker must be free of any criminal conviction connected to any business in the previous five years," said the NCA spokesman. "He is also required to provide a tax clearance certificate, a copy of his most recent audited accounts and he must satisfy the NCA of his financial stability."

Despite the small number of pawnbrokers, during the economic downturn of the last few years, many people pawned precious jewellery to raise a bit of money - whether that be for Christmas gifts or other short-term finance. When banks are tight-fisted, pawnbrokers are seen by some as the only way to get a small loan quickly.

You must provide ID and sign a contract when taking out a loan from a pawnbroker. As long as you're pawning something which a pawnbroker is interested in, it is relatively easy to get a loan this way. Unlike bank loans, a pawnbroker won't check your credit history.

"Before entering into any credit agreement, a consumer should read all documentation, making sure that they fully understand what they are agreeing to," said a spokesman for the NCA. " If they are unsure about any of the terms and conditions, they should clarify them with the business before signing."

Know exactly what you're getting into when pawning something. Be sure that you can risk pawning it. An old ring from an ex could be something you'd easily part with - but your wedding ring is probably a different matter. Remember, if you're pawning something precious because you're short of cash, you might not be able to repay your loan on time - which means you could lose it.

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