Pawnbrokers - way to borrow money

This is another way to borrow money, though it can be expensive. If you use a pawnbroker, this will involve leaving something valuable that you own with the pawnbroker who will then lend you an agreed sum. You will be given a receipt and will be asked to sign an agreement, (a copy of the agreement should be given to you). The agreement will say when you have to pay back the money; this is usually within 6 months.

You will have to pay interest on the loan, and this could be more than the interest charged at a bank or building society. Once you pay back the loan and interest the item(s) that you left with the pawnbroker will be returned to you when you show your receipt.

If you lose your receipt, you will need to sign a sworn statement to say that you have lost your receipt. If the amount you borrowed is over £25, you will need to have this statement "sworn" by one of the following, a solicitor, justice of the peace, notary public or commissioner for oaths.

If you cannot pay back the loan the pawnbroker is entitled to keep your item(s), or the pawnbroker can agree to renew your loan, and you will be given a new agreement. If the item(s) was worth more than £25 and you cannot pay back the loan and do not renew the loan the pawnbroker can sell the item(s) to try and recover the money that you owe.

If the item(s) is sold for more than you owe you are entitled to the balance. If it is sold for less than you owe you are liable for the shortfall.

If you have borrowed more than £50 the pawnbroker must give you 14 days written notice before he or she can sell the item(s) and they must tell you what the sale price will be and where and how the item(s) is to be sold.

After the sale and before 20 working days have passed the pawnbroker has to send you another written notice to say how much they received for the item(s) and what it cost to arrange the sale.

If you are not happy about the price recovered for your item(s) you can take the pawnbroker to the Small Claims Court.


Consumer Law