You can negotiate in pawnshops

Pawnbroker should be a last resort

Immediate cash and almost no formalities: Many Germans borrow money from pawn shops, because pawnbrokers still pay out in cash even if banks would not give the customer a cent. Consumer advocates warn, however, of the cost of pawn loans. Those who cannot do without them should at least negotiate.

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Around one million customers bridged financial bottlenecks with a pawn loan last year, according to the Central Association of the German Pawn Loan Industry in Stuttgart (ZDP). In the first half of the year alone, the number of loan agreements rose by 2.3 percent. "That has something to do with the high gold price," explains ZDP managing director Klaus Germann. "Anyone who has jewelry loaned now gets a higher loan."

That in turn says something about the pawnbroker's customers. The typical lending house customer is someone who does not earn badly, but who spends everything on his comfortable life: "Neither the rich nor the very poor come to us," says Germann. "The rich don't need it, and the poor have nothing to pledge." For loaners, the financial bottlenecks usually result from unexpected expenses, such as repairs that suddenly arise.

In such situations, a pawn loan is advantageous: Unlike a bank, customers don't have to explain a lot or wait a long time, says Germann. "The money is there within a few minutes, you just have to put your identity card on the table." Schufa information is also not required, and nobody asks about loan security.

However, the unbureaucratic procedure has its price: According to the association, one percent of the loaned amount is due per month for pawn loans of up to 300 euros, for example. However, the so-called cost reimbursement often makes up the largest part. With an average deposit of 250 euros, the interest amounts to a total of 8 euros per month, Germann calculates.

That is a relatively large amount of money for bridging a financial bottleneck, believes Georg Tryba from the North Rhine-Westphalia consumer center in Düsseldorf. In a test, consumer advocates compared the loan terms of pawnbrokers. "Deposit interest is up to 40 percent a year," is their balance sheet. "An overdraft facility would be much cheaper," says Tryba - if the customer still gets money from the bank.

"Pawn loans are only a short-term solution," says Claudia Kurzbuch from the Federal Working Group on Debt Counseling in Kassel. "You are only the very last choice if nothing else works." Because debt problems cannot be solved with a pawn loan - they can at best be bridged for the moment. "Otherwise, at some point, all of the pawnable items in the household would be gone."

Not everything is suitable for the pawnbroker. Above all, the items should be in the customer's possession, says Kurzbuch: "Anyone who brings something to the pawn shop that has not yet been paid off can be punishable by law." In addition, the items should work and be in as good a condition as possible. Even then, it can be difficult.

For example, entertainment electronics such as a television or DVD player quickly lose their value, says Georg Tryba. "Anyone who paid 400 euros for a digital camera a year ago can be happy if they still get 50 euros for it today." The easiest way to turn jewelry into money, advises Klaus Germann. That has something to do with how pawn shops work: Because a pawnbroker can auction jewelry more easily if the customer does not redeem his deposit within the agreed period.

If you urgently need a certain amount, you should ask various pawnbrokers, recommends consumer advocate Tryba. In the experts' test, some pawn shops would have paid three times what others would have offered. It can also be worthwhile to haggle: "You can usually get more out of it through intensive inquiries." Some pawnbrokers added up to 50 percent in the test.

However, every customer should ask themselves whether it really makes sense to get the maximum out of their credit. "The more I take, the more interest I have to pay," warns Tryba. "If someone offers me 400 euros, but I only need 200, then I should only take the 200."