As loans become harder to obtain, particularly from the main high street banks, many people are looking for alternative forms of funding for the personal loan they require, which has led to a resurgence in the number of Pawn Brokers across the UK.

Pawn brokers have been around for many years and at the beginning of the 20th century, they were the main source of a loan for the working class masses of Britain, offering small short term loans against an item of the borrower’s personal belongings as security for the loan.

By the 1970’s, pawn Brokers had almost died out altogether, with only around 50 remaining. However, recent difficulties in getting a bank loan have caused a huge increase in this area of the loan market, with more than 1,000 Pawn Brokers now operating across the country.

Any personal item can be used as security for a pawn broker loan and the loan is offered without any credit checks, or no adverse credit rating of the loan should default, the item in question is simply sold by the broker to recoup their losses. Typically a Pawn Broker will offer around 40 per cent of an item’s value on a loan.

The average interest which is charged on a pawn broker loan is often around 90 per cent APR (Annualised Percentage Rate) and although this is particularly high compared with a bank loan, for example, they are usually only short term loans and still significantly cheaper than the alternative of a pay day loan.

Des Milligan of the UK National Pawn Brokers Association commented on the change in the type of customers now seen by Pawn Brokers, he said “These new customers could once have relied on the banks to refinance them for a new car loan, say. Now the banks are saying no. small businesses too, are using pawn brokers to pay for stock or wages, until payment comes in.”