At about midday, Grace walks into Pickwick Pawnbrokers in Dartford and places a thin 14-carat gold chain on the desk. The 73-year-old needs £40 to top up her smart meter, so she is handing over a Christmas present from her late husband. It usually has a diamond pendant on it. “It looks like the sun,” she explains.
“I feel sad to be giving it up,” she says. “I feel annoyed that the government is not doing more to help us when they know everyone is struggling.”
Grace (not her real name) is one of many regular clients at the Kent pawnbroker. Amid the cost of living crisis and with inflation stubbornly high, the Financial Conduct Authority says there has been a 25% increase over the last year in the number of new loans from pawnbrokers. Nathan Finch, Pickwick’s managing director, notes an uptick in business by about 30% in their eight stores over the last 12 months alone.
They are seeing more Rolex watches, designer handbags, diamond jewellery and other luxury items being pawned. “That is a consequence of slightly wealthier people being impacted by the cost of living,” Finch says, adding that he has seen a lot of customers who are paying a mortgage and are medium-to-high earners. “People think pawnbroking is a preserve of lower-income people but that is a fallacy,” he says.
Finch expects the rise in business to continue, saying that pawnbroking is “an economic barometer”.
He adds: “People are still coping with these loans and cutting their financial cloth accordingly. I still think there is more to come in terms of the true cost of inflation. The customers I speak to are seeing prices rising higher than the national [inflation] figures suggest.”
Pawnbrokers have gained popularity at a time when other forms of short-term credit, such as payday lending, have reduced since the government introduced tough regulations to curb rogue lenders. The industry has also benefited from the soaring value of gold.
Richard Lane, director of external affairs at debt charity StepChange, says that people with “the least financial resilience are often locked out of much of the credit market, leaving them with few sustainable options beside high-cost credit”.
He says that while pawnbroking “may not be quite as harmful as other types of high-cost credit, it’s still an expensive form of borrowing”. He adds that “for those relying on it to make ends meet, it’ll likely only worsen, rather than alleviate, peoples’ financial position in the long run”.
Grace describes pawning jewellery as her only option because her pension just about covers her bills. “I lost my husband a few years ago but he bought me some quality jewellery, so when one of my children needs money for a bill, or I need some money for bills, I bring in an item,” she explains. She says that having it as an option makes her feel “at ease”.
There are 12 pieces of her jewellery in the store at the moment, and one is particularly precious: a pearl ring she got for her 30th wedding anniversary. She has also pawned a locket with a photograph of her mother in it. “They are my last-resort ones to give up,” she says.
Shortly after Grace hands in her chain, Bradley Hayes, 39, comes into the shop to discuss a payment on a ring he has pawned for £260. “I pay my loan off bit by bit, so £40 here and there,” he says. The unemployed single father-of-two uses the money for food and bills. He says his current benefits do not cover his expenses.
“I have pawned all my gold, but this ring is important to me so I have to buy it back … My nan bought it for me and she passed away in January,” he says. “I am not sure what my plan is [in terms of making money] but hopefully things will get better.”
Finch says his business has a personal relationship with customers, and all those who walk through the door are instantly recognised by staff. “My view on lending generally is that it is a habitual thing. We are an advanced consumer credit nation – we borrow money and spend it.”
He says that if you took away pawnbrokers, the cost of living crisis would still exist, and it is not symptomatic of it but rather a “solution to it”.
Pawnbroking is a regulated sector but it does allow customers to borrow relatively large sums without credit checks or proof of income. Borrowers must provide a valid photo ID and proof of address, but the deal will be based on the item of security they are putting down.
Finch says that, typically, a broker will lend up to 70% of the item’s market value. Those who agree a deal will pay the loan back, plus interest. For this reason, Finch says it is better not to borrow huge sums you cannot pay back quickly. He adds that nine out of 10 pledges are redeemed because people want to get back items, which often have sentimental value.
The average amount people borrow is £400, he says, although he has lent £20,000 for a watch. Interest depends on how big the loan is, so it will be about 2% for a loan of £10,000 and 10% for a smaller £40 item. It is always paid back monthly, and Pickwick gives at least seven months to redeem a loan. If customers need more time to pay when the contract ends, the interest can be paid off and loan renewed.
Pawnbrokers are not allowed to sell for less than market value, and if an item does sell for above the estimate, the customer gets the difference between the sale price and what is owed.
At the end of the visit, regular customers Anthony Forshaw, 45, and his partner Fiona Ackrill, 44, come in. They say they have used the pawnbrokers frequently in the last two years and currently have loans out on three items. “I have sclerosis and have been told I cannot work any more,” Ackrill says, explaining that she receives disability benefits and universal credit.
Forshaw recently had an operation for a hernia and has been unable to work for eight weeks. The pair applied for additional benefits but were left waiting for two months to find out if they qualified. “So we had no money,” Ackrill says.
To get by, they pawned jewellery Ackrill was given by her mother, who died eight years ago. “We had tried everything else – loans and credit cards – but we could not get support because we were on benefits. They were just closing up shop on us,” Ackrill says.
She still worries about the future. “We’ve got to do what we’ve got to do. If I have to keep doing this just to pay bills, then we will have to do it.”
Lane advises those who are struggling financially to first seek help from charities such as StepChange. “We can talk you through your options and assess how we move forward together,” he says.
• This article was amended on 23 October 2023 to correctly refer to a 14-carat gold chain, rather than a 40-carat gold chain.
