Do Pawnbrokers Exploit the Poor?
February 4, 2010 by Richard Perkins
Filed under Cheap Payday Loans
Think of a pawnbroker and you may drift into fantasies of dark London times, Dickensian back alleys infested with rats and unseemly characters lurking around every corner. It may seem a very Victorian image, but to what extent do pawnbrokers exploit the poor even now?
Certainly at a time where we are all trying to use every penny we have, going to a pawn shop may help us to get a little more money when needed. The great thing about using a pawn shop compared to a bank is that you never need to wait for your request for a loan to be agreed. Instead, as long as you can provide suitable collateral as security for the money you borrow, they will be willing to lend to you.
However, you need to remember that, when it comes to using a pawn shop, the amount of interest they charge on these loans is much higher than a bank would charge. So really, this type of financing should only be used for a short period of time, for example, if you find yourself without some money until your next pay cheque arrives.
Any pawnbroker that is a member of the NPA (The National Pawnbrokers Association) must adhere to the regulations set out in the manual. Over 100 years old, the NPA is responsible for safeguarding the interests of over 900 members, as well as the interests of their customers.
Those who do become members of the NPA are provided with an operations manual along with a code of conduct manual to which they must adhere at all times. Plus, as pawnbroking is in fact part of the credit industry just like other financial institutes, banks and lenders adhere to the regulations set out in the Consumer Credit Act of 1974.
Failing to attain a licence to open and run a pawnbroking business may result in a fine or at worst, a prison sentence. Licences can be obtained from the Office of Fair Trading (OFT).
These kinds of loans are subject to legislation like any other type of loan. Specific information must be traded between pawnbroker and customer before the loan can be approved, ensuring pawnbrokers cannot exploit their customers.
Pawnbroking business Uncles Money will take rings, necklace, bracelets and other jewellery as loan collateral.
