Pawn shops: money for gold | tagesschau.de

In the pandemic, many people lost their income. If you have money worries, you sometimes prefer to turn to a pawnbroker than to the bank.

Kay Philipp’s hotel is idyllically situated: from the terrace of the old castle hotel, guests look out into the green, the historic old town of Leonberg with its half-timbered houses from the 15th century is only a few kilometers away. But with the corona pandemic, the guests inevitably stayed away. The hotel’s own restaurant also had to close.

It was a tough time, sums up Philipp: “The hotel was simply empty. That means you ordered your maid anyway, she still cleaned it. It gets dirty when no one is there.” Now that the guests are slowly coming back, Kay Philipp has to invest. He needs an ice machine in a hurry. A loan from the bank is out of the question for him. The only way to still get money is to go to the pawn shop. Daughter Maria wants to help and pledge her gold gifts from grandma.

The centuries-old industry is picking up momentum again

“After the renewed lockdown, we are now slowly feeling that business is picking up again,” reports Wolfgang Schedl, managing director of the Central Association of the German Pawn Loan Industry, when asked by tagesschau.de. Contrary to popular belief, pawn shops have not yet been among the winners of the crisis. “Consumption fell, people needed less money,” says Schedl. This led to declines in the loan and burdened the pawnbrokers. Hopes are now on the summer.

The business with the deposit is ancient and has been established in Germany for centuries. The Regensburg pawnshop, founded in 1650, is considered to be one of the oldest pawn shops in Germany. But why are pawn shops still needed in times of fast online credit and low-interest loans?

“With the pawn loan, the personal creditworthiness of the customer is irrelevant, so that his economic and financial circumstances are not checked,” says Schedl. In contrast to the bank loan, it is not the customer who is personally liable for repayment of the loan, but only the pledge, such as the loaned watch or the gold bar. “If the loan is not repaid, the pawnbroker is legally obliged to auction the property,” said Schedl.

Millions of dollars are stored underground

Treasures worth several million euros are stored behind heavy safe doors under the Stuttgart market square. From the luxury watch collection to a yacht to the valuable clarinet, the Stuttgart pawn shop Eppli has already mortgaged almost everything that is of value. Hotel owner Philipp and his daughter want to turn their grandmother’s gold gifts into cash.

Valuer Fabian Markus takes a close look at the pieces of jewelry with a small magnifying glass. He knows all the materials and their price. He is particularly fond of one ring, it is made of platinum and set with colored diamonds. All in all, the expert estimates the value at around 4700 euros. “We’ll pay half of that,” the appraiser announced. He can now offer them 2350 euros and pay them out directly. A surprise for father and daughter. Grandma’s gold gifts are worth more than they thought. Nevertheless – giving the presents is not easy, says daughter Maria: “But if it makes sense and you get it back, then it’s easier.”

There is a risk for the pawnbroker

According to its own information, the Central Association of the German Pawn Loan Industry has around 250 member companies nationwide. They mainly earn money with interest and fees through the deposit business, which are often higher than with bank loans. If, in the event of an auction, more money is received than the pawnbroker originally brought to the customer, the head of the Central Association, Schedl, explains, “the customer can collect this additional proceeds from the pawnbroker within a period of three years”. If less money is taken, however, the pawnbroker is left with the costs.

Philipp and his daughter want to pay back the money and redeem their grandmother’s gold gifts. But now you can first order the urgently needed ice cream machine so that the Schlosshotel Höfingen can pamper its guests with ice cream in summer. And that should then wash money back into the empty coffers of the hotel.