How to become a Pawnbroker

  • Price: £5.99
  • Published: December 2015
  • Type: Business Opportunity Profile
  • Format: PDF
  • What qualifications and skills are required?
  • What are the key market issues and trends?
  • What are the main trading issues?
  • Legislation
  • Further information

Pawnbrokers provide short-term loans to consumers and business owners without requiring a credit check to be carried out on them. However, repayments are at a relatively high rate of interest when compared with rates typically charged by other suppliers of personal and commercial loans. Loans are secured by personal items such as gold, watches or jewellery, and increasingly fine wines, luxury handbags, designer garments and fine art and antiques. These are valued by the pawnbroker and 'pledged' by the borrower to be held by the pawnbroker until the loan is paid off. Most pawnbrokers rely on customer loyalty, with around 80% of their business coming from regular customers.

Pawnbrokers also buy jewellery and gold for cash, as well as providing quick and easily accessible credit. Most pawnbrokers sell items that are not redeemed by borrowers from their own retail premises or online, or to other traders such as jewellers or scrap metal merchants. Some traditional pawnbrokers also provide jewellery and watch repairs, while others provide other financial services such as cashing cheques and payday advances.

According to the National Pawnbrokers Association (NPA), anyone starting up as a pawnbroker will usually require capital amounting to between £50,000 and £100,000 to lend in their first year of business. Providers of consumer credit are strictly regulated, and before beginning to trade, a pawnbroker must be authorised by the Financial Conduct Authority (FCA).

This profile provides information about starting up and trading as a pawnbroker. It describes the skills required, the training available, the current market trends and some of the key trading issues. It also explains the legislation that must be complied with and provides sources of further information.

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