How does a pawnshop work? How pawnshops work in Russia The meaning of a pawnshop

There are often times in our lives when the need for money arises here and now.

This problem can be solved in completely different ways. If you don’t want to ask friends or relatives for money, there are several more options to choose from.

You can go to a bank and get a loan, become a member of a credit union and use its services, or take money from a microfinance organization. But the most common way out of the situation is to use the services of pawnshops.

We will talk about the advantages and what can be sold to a pawnshop with maximum profit.

A pawnshop is a legal and financial organization that provides short-term loans secured by movable assets and real estate.

The name itself comes from the Italian “Lombardy”, this was the name of the province in Italy, it was its residents who opened the first pawnshops in Europe.

At that time, only jewelry was provided as collateral, but over time, the range of collateral expanded.

The operating scheme of all pawnshops is very simple and understandable to everyone. A person brings an item that he is ready to pledge, and the pawnshop, having assessed the value, issues money. Therefore, before you go for a loan, you should make sure that the item you are renting is worth the money you are expecting.

With great success, the pawnshop accepts new and expensive items, this also includes jewelry, the weight and fineness of which must be established before putting them on bail. After the assessment, loan repayment terms and interest rates are agreed upon.

All items that are handed over to the pawnshop must be in good condition. This is especially true for phones, all household appliances and watches. The list of valuables that meet the requirements of pawnshops is quite large, but basically it looks like this:

Not only the items, but also the borrower himself must meet the requirements of the pawnshop. This must be a person who is 18 years old at the time of the transaction. You must have your passport with you. Otherwise, the pawnshop will refuse to accept the deposit.

To ensure that your trip to the pawnshop is not in vain, you should familiarize yourself with the list of items that cannot be returned. These rules are supported by legislation, so there is no point in trying to rent out the property listed below:

Real estate pledge

This option is relevant if the bank refuses to issue a loan secured by property. There are a number of pros and cons of working with a pawnshop in this case. The advantage is that you can withdraw the money the very next day. There is no need to collect a huge amount of documents, and also, the pawnshop accepts apartments or houses that are still unfinished.

Of the minuses, it is worth emphasizing that the interest on the loan will be much higher than in a bank, and the repayment period will be very short. Similar conditions will await those who decide to mortgage their land plot; in this case, the following documents will be needed:

certificate of absence of encumbrances on the site;
Cadastral extract;
documentation that confirms the identity of people associated with the site;
copies of government acts on property rights.

The main advantage of each pawnshop will be the speed of registration and issuance of money immediately after the property is assessed. In addition, the client has the right to return his things immediately after he has established his financial affairs.

No bank can boast of such efficiency and the minimum number of documents provided by the borrower.

The entire financial component of the issue lies in the shortcomings. Interest on the loan will be mercilessly high, but not critical, from 0.5 to 1% per day, and the terms for repaying the money are short. But, for paying a certain percentage, the client has the right to extend the contract and retain the right to buy back his valuables.

conclusions

Lately, pawnshops have significantly improved the level of their service. Some of them are already competing with the banking service sector and microfinance companies.

Their activities are closely monitored by government control services, so it has become much more difficult to be deceived, which is another plus for the borrower.

To successfully work with a pawnshop, you should always soberly assess your capabilities and understand the principles of operation of such organizations. Taking into account all these subtleties, any person will solve his temporary financial difficulties with the help of a pawnshop.

A pawnshop is rightfully considered the easiest way to borrow money without unnecessary delays. Unlike a bank loan, if there is no repayment, such a loan will not lead to prosecution by collectors or the risk of seizure of property through the court. But how does a pawnshop actually work and what pitfalls exist in its work? Is it all that simple and how can you avoid falling for scammers? First of all, you need to take a serious approach to choosing a pawnshop, and secondly, first study the rights and obligations of the borrower, protecting yourself from unforeseen situations.

What is a pawnshop and how does it work?

Legally, a pawnshop is an institution that gives money against property collateral. In addition, employees of the institution can provide information services and consultations free of charge. Borrowed money is issued by the pawnshop immediately. All you need is a passport and an item that remains as collateral. The borrower does not pay for the assessment of the item by a specialist. If the pawnshop operates officially and “cleanly”, and is not a fraudulent organization, then the borrower does not receive any risks other than the loss of the item pledged.

Pawnshop gives money as collateral

How to get a loan

A person who has reached the age of majority has the right to receive a loan. How the system works:

The borrower must have his passport with him when bringing the item.
Next, the subject is assessed.

The borrower is issued two documents:

bail ticket;
agreement conditions.

The pawnshop employee must familiarize the client with his rights, responsibilities, and also notify him of all the conditions. To return an item, it is necessary to return the full amount, as well as the percentage “accumulated” while the item was in the pawnshop.

What can be taken

Of the items that can be pawned, perhaps only real estate is not included in the list. What do they accept at the pawnshop:

Precious metals.
Gems.

Many people mistakenly believe that only gold or silver is allowed as collateral. But that's not true. What else can you pawn at a pawnshop besides gold:

Household appliances.
Gadgets, phones, electronics.
Interior items.
Art objects.
Cars and other means of transportation.

What is gold accepted for?

There is no set single price; it is determined by current quotes (you can check it at the Central Bank). Also, a lot depends on the condition of the product and the assessment made by a specialist who is clearly not interested in inflating the price. For gold of a quality higher than 750 purity, you can get more than 1,000 rubles per gram. However, it is more profitable to contact state banks when buying gold.

What is silver accepted for?

The situation is the same with silver. A gram costs, on average, 20-28 rubles, depending on the sample and the characteristics of the product. Rare or antique jewelry will cost more.

The principle of operation of a pawnshop in Russia is such that it is impossible to mortgage an enterprise, apartment, garage, and so on. It is also impossible, as is done in a bank, to invest money at interest. If a pawnshop offers such services, its activities are regarded as illegal. In general, his activities are a cross between the work of a bank and a thrift store.

The specialist sets the price of the item being delivered

Terms for issuing loans and their maximum size

The maximum shelf life of a returned item is one year. But the sooner it is redeemed, the better, since the interest will grow every month, and its size is higher than in banks. In addition, there is one important nuance: the cheaper the item is valued, the higher the percentage will be charged. Need a long-term loan? Then it's time to go to the bank. The maximum loan size is determined directly by the organization that provides it.

Rights and obligations of the borrower

By signing the agreement, the borrower undertakes:

repay the debt on time, fulfilling the terms of the agreement;
if necessary, provide complete information about yourself.

Responsibility for the thing, if it is listed as stolen, is borne by the person taking the loan.

Borrower rights:

the ability to repay the loan ahead of schedule, without waiting for the deadline under the contract;
obtaining comprehensive information about accrued interest, the deadline for payment and other terms of the contract before executing the transaction;
return of the brought item safe and sound;
receive a pawn ticket in your hands (otherwise, we are not talking about a pawnshop, but about a “thrift shop”);
If, as a result of signing the agreement, the money was not provided, the borrower has the right to appeal the document and declare the transaction invalid through the court, as well as file a claim if the item was not returned in proper condition or was not returned at all. The pawnshop must insure the item being accepted at its own expense. If, in addition to interest, you are charged an “insurance” amount, the organization’s activities are illegal.

Pros and cons of loans

The advantages of loans from pawnshops include the following:

no proof of income is required;
the contract can be extended;
procedure time – no more than 15 minutes;
the pawnshop is not interested in the origin of the item;
a wide range of what can be sold at a pawnshop;
If it is impossible to repay the loaned amount, the borrower will not have a bad credit history and there is no threat of extortion to repay the loan.

There are also disadvantages:

the cheaper an item is valued, the higher the percentage, and they try to value objects just as low as possible;
The interest rate is higher than that of a bank loan.

It all depends on the goal: if you need a large amount, the return of which needs to be spread out over a long period of time, it is better to resort to the services of a bank. Gold can also be taken to the jewelry store, but in this case you cannot get it back.

The pawnshop charges interest for storing the goods.

What to do if it is impossible to repay the debt

If the return period has come, but there is nothing to pay, then you can extend the contract. Pawnshop employees are reluctant to take this step, but the borrower has the right to extend the term. If the pledged item is valued at more than 30 thousand rubles, then it will be sold at public auction, so there is still a chance to buy back your favorite item. An item can be sold either above or below the loan amount:

in the first case, you can demand a refund of the difference;
in the second case, the debt is considered returned regardless of how much the pawnshop has lost.

Can the property be sold before the loan is repaid?

In no case can an item be sold before the deadline for which funds were issued! It is put up for auction only if for some reason the borrower is overdue for payments by more than a month.

How to protect yourself from fraud

In order not to say goodbye to the collateral forever, before signing the contract you must:

ask for constituent documents, which must indicate the status of the institution (some “thrift stores” sometimes disguise their activities as the work of a pawnshop; you need to take into account that “thrift stores” can sell an item at any time, because legally this is not a pledge);
employees may not specifically include all the things brought into the contract, so everything needs to be checked carefully;
the items that were brought may not be returned, so it is necessary to thoroughly write down information about the item (if it is a phone - IMEI, if it is a watch - indicate that it has a strap), when coming to the pawnshop you can take someone you know with you who could speak witness;
The equipment may be returned in poor condition, perhaps during the time it was in the pawnshop the employees used it (therefore, when returning it, it is better to place the item in an envelope or box that can be sealed - this is not prohibited).

The actions of an employee of an institution are suspicious when he refuses to provide appropriate information or documents confirming the status of the institution. It is safest to go to pawnshops that have existed for a long time and have a network structure. If a single stall on the market issues secured loans at a lower interest rate, there is no need to rush. He may be working illegally.

Today in Russia there are about 4,500 pawnshops (compared to European countries, this is a fantastic number), the conditions in which may vary. Therefore, the choice of organizing a loan must be taken seriously. Knowing what a pawnshop is and how it works makes it easier to find the right one. According to statistics, most often they “borrow until payday” - for a month. Approximately 10% of citizens do this every month. What justifies such high trust? Perhaps the simplicity of morals. But most likely, and, unfortunately, the standard of living.

The old usury scheme, when money was lent against property, is used today in specialized commercial organizations called pawnshops. This is already a civilized business, controlled by the state, and it has its own specific rules. Despite the fact that pawnshops issue short-term microloans, they do not belong to (MFIs), although they are subject to general laws, for example, Law N 353-FZ “On consumer credit (loan)”. What kind of organizations are these and how they work - we will talk about this topic in our article.

Pawnshop - what is it?

A pawnshop is a specific commercial organization that issues short-term loans to individuals secured by movable property (valuables) provided by them, and also offers storage services for this property. Such a company must be a legal entity (for example, LLC) and, what is important, the name of such an organization must include the word “Pawnshop” and the organizational and legal form, for example: “Pawnshop LLC “Money is here and immediately on bail.” This means that this is an organization that is included by the Central Bank of the Russian Federation in the state register of pawnshops, and it must comply with all the rules of the law (unless, of course, it is a pseudo-pawnshop).

The main law on the basis of which such companies offer their services on the financial market is the Federal Law of July 19, 2007 “On Pawnshops” (its latest edition dated 2015). An equally important law to which their activities are subject, we have already indicated earlier, is the law “On consumer credit (loan)”.

A little about the features of pawn lending. A secured loan is most often concluded for a short-term period (maximum for a few months), but the loan period can be extended to 9–12 months (by law, the maximum loan period is 1 year). The collateral is any liquid valuable thing, i.e. it can be useful not only to you, but also to any other person if it is sold. The most popular value is gold items (rings, earrings, bracelets, etc.).

What else can you take to a pawnshop besides gold? This could be a smartphone, a modern laptop, antique items, paintings, sets, etc. The amount of the loan issued depends on the value of the valuable item, which is assessed by the pawnshop employee (if you, of course, agree with him, otherwise they will not give you the money!).

Interest on loans from pawn shops is very high and can be 1-2% per day. Despite the fact that the loans are fully secured by collateral (i.e. the company bears virtually no financial risks), the interest rate is literally “protective” (but, interestingly, comparable to the rate in an MFO).

The entire time the client repays the borrowed funds and accrued interest, this credit institution will store the collateral property of the mortgagor. She does not have the right to do anything with this thing (seize it or sell it), unless its storage violates criminal procedural legislation or legislation on administrative offenses. The organization must guarantee the safety of the item throughout its storage.

The peculiarity of cooperation is that to complete the transaction you will not need a large number of documents; you will need to have a passport of a citizen of the country; in special cases, you will also need a document on the right to own the collateral property.

Instead of a passport, you can present any other identification document in accordance with the legislation of the Russian Federation. Thus, a citizen of another country can also receive borrowed money, as long as there is collateral and the necessary document.

A little history

The name came to us from Italian. In this country there is a small province of Lombardy, whose residents were the first in Europe to become the organizers of a whole network of institutions that issued money to everyone, but always on the security of silver or gold items. And if in the Russian Empire the first official pawnshops were opened in the 19th century (and moneylenders worked in them), then in Europe such an institution appeared much earlier - in the 15th century.

In the Soviet past, such organizations also existed, but they were completely owned by the state and were part of the State Bank. In those days, it was possible to get a loan solely on the security of jewelry, and the amount given was small. Potential clients had to stand in long lines to get a small amount at their disposal.

Features and types of modern pawnshops

The modern version of such institutions are small commercial organizations that create competition not only for credit institutions (for example, microfinance organizations), but also for the banking structure. Their share in the microloan segment is low - microfinance organizations have recently dominated the market. But with the advent of laws regulating pawnshop activities, they began to actively develop again and operate, as they say, in the legal field.

To ensure security, the premises of a modern pawnshop are equipped with video surveillance cameras; they often have security guards to ensure law and order and the safety of customers.

There are several types of pawn shops. The most common are:

Jewelry - precious stones, expensive jewelry, items made of gold, platinum, silver (including crafts and kitchen utensils made of precious metals) and other valuable things of not too large sizes act as collateral.
Automotive – the collateral is the client’s car, which is installed on a special site (guarded parking lot) until the mortgagor pays off his obligations to the organization, including interest.
Others - here funds can be obtained after depositing equipment, electronics, phones, modern gadgets that are valuable as collateral.

Less common are other types of organizations where funds can be obtained in exchange for expensive watches, rare and antique dishes or household items. It is even less common to secure real estate, but it is certainly in demand and expensive.

How does a pawnshop work?

The principle of obtaining loans in pawnshops is practically no different from similar procedures in microfinance organizations. For all the details, please refer to the article at the link above. We will only briefly talk about the procedure for obtaining borrowed funds there.

First, the expert will definitely evaluate the valuable property brought to you in order to determine the real (market) value of the product. Each type of collateral has its own coefficients, which are taken into account before paying out cash.

After the examination, the possible amount and term of the microloan will be discussed with you, and an interest rate and procedure for returning the funds will be offered. As a rule, the loan amount will be significantly less (2-3 times) the amount of the collateral, but if the borrower needs the funds urgently and the conditions suit him, then a loan agreement and a storage agreement are drawn up and signed with him. Next, the client receives money at the cash register. After the microloan expires, it will need to be repaid, otherwise penalty interest will be charged. Only after the entire loan amount has been repaid, taking into account accrued interest, will your item be returned to you. Keep in mind that if the loan has not been repaid on time, then you only have one month to do so. According to the law, this is a grace period under the loan agreement, after which the pawnshop can foreclose on the collateral, i.e. remove it from storage and put it up for sale.

You can often face a difficult financial situation when you really need money. Usually at this moment there is no opportunity (or no desire) to borrow from friends or acquaintances, there is no credit card, and a cash loan takes a long time to be considered. The situation can be aggravated by a negative credit history or, conversely, heavy debt load. In this case, the pawnshop comes to the rescue. For a certain fee, the pawnshop will lend the required amount, but in return you will need to give a certain item as collateral. After the debt is paid, this item is returned to the owner.

If the borrower is unable to repay the debt, the pawnshop simply sells the pledged item and pays off the debt. Borrowers with the worst credit history can go to a pawnshop, and they won’t even check it here. The deposit will be a guarantee of return, and in case of non-return, the pawnshop will still remain in the black. The activities of pawnshops are regulated by Federal Law About pawnshops" No. 196 dated July 19, 2007 G.

If earlier pawnshop services were considered something obscene, now there are quite a lot of these organizations. People prefer not to notify their friends about financial difficulties. To get the required amount, it is enough to pledge a valuable item, and when the money appears, pay off the debt and buy it back. However, this process occurs under certain conditions.

What is a pawnshop?

This is a highly specialized commercial institution that issues short-term mini-loans secured by things/property. If you have the appropriate collateral, the approval rate for a miniloan is almost one hundred percent, and the time to receive money is a few minutes.

The business of pawnshop institutions is organized on the mortgage principle: a valuable item is given for storage, and in return an amount equal to part of the cost of this item is given. In financial terms, the activity of pawnshops is the issuance of short-term loans secured by liquid property. According to the law, a pawnshop institution does not have the right to engage in business, except for providing loans, storing things, and providing information and consulting services. To store the collateral in the premises, conditions must be created (for example, safes), thanks to which the collateral will remain safe and sound until redemption.

The borrower has the right to repurchase the surrendered item within the established time frame (specified in the contract). Redemption periods can vary from 2 days to a year. The redemption price is determined as the amount issued in hand plus a percentage for storage. The amount of interest may include payment for storage of collateral, insurance, and use of borrowed funds.

When applying for a mini-loan at a pawnshop, you need a passport and collateral, which will be assessed by specialists, after which the amount to be issued is calculated. Usually it is 40-75% of the market value of the collateral. This is due to the fact that if the borrower is unable to repay the debt, the pawnshop can sell the item and fully cover its costs. There is also a risk of depreciation of the collateral, for example, if the collateral is equipment that becomes obsolete every six months.

The process of applying for a loan at a pawnshop

Collateral assessment and amount calculation.
Coordination of loan issuance and repayment terms. Here, the repayment period of the debt, the amount of interest, the amount to be issued, repayment parameters, conditions for non-repayment of the debt and the sale of the collateral are discussed on individual terms.
An agreement is concluded in which all conditions are specified.
A pledge sheet is filled out, which states: to whom the mini-loan was issued, by whom it was issued, for what amount, date and place of issue, description of the pledge, amount of fees for using the money.

Within the specified period, the amount with interest must be returned to the pawnshop. If the borrower does not do this, then the pawnshop begins to sell the collateral. This can be done, by law, one month after the expiration of the contract. If the borrower is not ready to fully repay the debt, then he has the right to pay interest for the current period and extend the contract. In this case, the collateral is again sent for storage.

The contract may be terminated early if the Ministry of Internal Affairs announces the confiscation of the collateral. The pawnshop is obliged to notify the borrower of this within 3 days in writing.

Types of pawnshops.

There are several types. They differ in specialization and focus of work. If a pawnshop takes any items as collateral: cars, jewelry, art, etc., then the direction of its work is universal and broad-based. If a pawnshop only accepts precious metals or jewelry, then it is a narrowly focused organization. Let's look at the main common types:

Jewelry. They work exclusively with jewelry and jewelry items. Gold, silver, and platinum are accepted as collateral. Everything is tested with special instruments to ensure compliance with standards and samples. Since these things lose little value over time, you can get a larger percentage of the market value (up to 80%) for them. They are also highly liquid, and a pawnshop can easily sell them without additional costs.
"Under the technology." This type of pawnshop is also one of the most common. Here you can get a loan secured by household appliances. At the same time, equipment is accepted only in good condition and preferably under warranty. You can get about 35-40% of the market value using equipment as collateral. This is due to the fact that equipment becomes outdated quickly and may break down. Most often, mobile devices, TVs, and PCs are pawned.
Antique. These pawnshops take antiques, paintings, art objects, coins, etc. as collateral. Experienced collectors show great interest in such pawn shops, since they can find truly rare items there. The loan amount for antiques can reach 60%. This is due to the fact that often borrowers themselves do not know the real price of the collateral. Appraisers take advantage of this and lower the assessed value.
Clothing. These pawn shops accept fur and leather products as collateral. Most often, coats made from expensive furs (Arctic fox, mink), genuine leather jackets, etc. are sold here. Such organizations are equipped with special premises for storing such goods. The loan amount can reach 50% of the value of the collateral.
Automotive. Here cars are used as collateral. Previously, the car was driven to the parking lot until the debt was paid off, but now, due to the high cost of storing such a large collateral, pawn shops prefer to take only the title as collateral and issue CASCO insurance for the car. As a result, the client retains his car, and if the collateral is destroyed, the pawnshop will still receive its insurance money. You can get a decent loan of several hundred thousand rubles using a car as collateral.

Conditions	Jewelry	Technique	Antiques	Clothing	Auto
Amount (% of appraised value)	Up to 80%	Up to 40%	Up to 60%	Up to 50%	Up to 80%
Percentage (per day)	0,2-0,4%	0,3-0,5%	0,1-0,4%	0,2-0,4%	5-10% per month
Term	Up to 1 year	Up to 1-3 months.	Up to 1 year	1-3 months	Up to 1 year

Comparisons with other types of loans.

The main and undeniable advantage of pawnshops is that they will issue a loan even with the worst credit history. The client does not need to prepare a lot of documents and wait a long time. But the loan is not issued free of charge: a valuable item is used as collateral. Even if the borrower is unable to repay the debt, it will be repaid through the sale of the collateral. In this case, the client will not be denied subsequent loans. The loan conditions of pawnshops and microfinance organizations are similar - the overpayment is approximately the same.

There are situations in life when a person temporarily finds himself in a difficult situation. Of course, you can try to find night jobs.

But the income received from this is unlikely to radically improve the situation. The bank loan will have to be repaid with high interest. Available reserves of gold and jewelry that have long gone out of fashion and lie in boxes and caskets as a meaningless and useless burden can come to the rescue.

By handing over your property to a pawnshop, you can always buy it back when you solve your financial problems. They offer a constant assortment of gold products, reasonable prices and the opportunity to purchase new jewelry.

Selling gold to a pawnshop is the best solution

A pawnshop is a place where you can sell gold quickly and profitably. The history of these establishments goes back several centuries. Modern pawnshops are often reliable, stable companies with a modern approach to work. But the basic principle of their activities remains the same as before.

The client, on a contractual basis, delivers a piece of jewelry or other expensive item to the pawnshop. In return, he receives a sum of money equal to some part of the value of the collateral. Gold can be redeemed by returning the loan received and paying commissions.

The advantage of going to a pawnshop is that the client is only required to provide a passport. No other documents, income certificates, or proof of ownership are needed. The list of things accepted by companies is quite extensive.

These include valuable fur, leather, silver cutlery, china, crystal, household appliances and even vehicles. But mostly people come here to sell their gold cheaply and quickly.

Location of a good pawnshop

Modern pawnshops are located in crowded places and are located in small rooms. Acceptance of collateral is carried out by professional appraisers.

There is always security and a video surveillance camera, just like in banks or jewelry stores. It is useful for the client to know that such companies must have a license to operate. The document must be posted on the stand.

The pawnshop client must be prepared that the jewelry will be valued below its market value. The size of the loan will also depend on the level of wear and tear of the item, the demand for it, and the manufacturer.

You can and should bargain in pawn shops. Appraisers are, to some extent, good psychologists and are able to determine at first glance how badly a person needs money. If one company rated your item too cheap, this does not mean that the same will happen in another.

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