Pawnbrokers are just one category of alternative lenders benefiting from the financial shortcomings of many UK consumers. Droves of people are taking short-term loans from pawnbrokers to cover living expenses.
Cash Converters, a high street pawnbroker, recently reported that its UK personal loan book nearly quadrupled from 2010 to 2011. Customers are exchanging jewelry and diamonds for instant cash or taking out a smaller personal loan.
For the 12 months through December 2011, the value of UK personal loans held by Cash Converters skyrocketed from £2.3 to £8.5 million. The company operates 208 stores in Britain alone where consumers can exchange valuable jewelry and gems for up to £10,000 in financing per contract.
In October, the company introduced an online personal loan application for consumers who need between £500 and £2,000 in cash over the short-term. Repayment schedule for this financing ranges from four to seven months.
According to the company, 96 percent of people applying for these payday loans online were new customers. Though the loans APR is much higher than rates offered by traditional high street banks, the financing is more convenient for consumers and available to those who have poor credit.
Most borrowers make repayments monthly via a direct debit from their designated bank account. Those who need an immediate cash advance of £10 to £600 can visit a Cash Converters store and arrange a weekly, fortnightly, or monthly repayment schedule.
To qualify for the