Of course, all pawnshops operate on the principle of issuing a certain amount of money for pledged property. In fact, the pawned item is stored in the pawnshop for a certain time, the client receives money to overcome temporary financial difficulties, and upon expiration of the agreed storage period, the client either buys his item back, paying certain interest and part of the money received, or abandons his property in favor of the pawnshop.
As a rule, the work of all pawnshops in Russia is structured in such a way that even after the expiration of the main storage period of the pawned item, there is a certain buffer zone - or a period with an increased interest rate. If during the additional period the client does not appear to redeem his property, then in this case it irrevocably becomes the property of the pawnshop and is then sold entirely at the discretion of the organization itself.
How to get a loan from a pawnshop
Clients of pawnshops can be persons who have reached the age of eighteen. Therefore, all transactions are carried out only after presentation of the borrower’s passport or driver’s license. Buying or accepting gold items as collateral is possible even if the jewelry does not have any identification marks (samples, impressions, company stamps, etc.).
The pledgor is not prohibited from being present during all events related to weighing the jewelry and assessing its condition. After all the formalities provided for by law have been complied with, a bilateral agreement is concluded, which spells out all the nuances of the transaction. Next, the borrower receives loan funds, and the financial company receives the collateral.
The most popular ways to defraud pawnshops
In recent years, banks have recorded an increase in loan defaults. Borrowers are not afraid of the presence of negative entries in the credit record, nor the opportunity to “talk” with collectors, nor the ban on traveling abroad. A significant part of the population takes out loans and credits without initially intending to repay them.
With pawn shops you won't be able to return the money. They are initially issued on bail. No ring, chain or smartphone - no bills. But the “craftsmen” have come up with several ways to scam a pawnshop and are trying to use them in practice.
Features of a pawn loan
As mentioned above, to obtain a loan from a pawnshop, the client must provide collateral. But in order to take it back, you will need to not only pay the borrowed amount, but also a commission for storing valuables and ensuring their safety. Its size must be specified in the contract.
As for the jewelry that the pawnshop accepts, these can be items made of noble or precious metals, as well as stones that have any financial value. Before concluding a transaction, all jewelry is carefully examined by an expert who evaluates its authenticity. In addition to finished products, pawnshops also accept as collateral or buy scrap gold, platinum, silver and palladium, ancient coins containing rare metal alloys or precious stones.
There is also a list of things that pawn shops do not work with. These include: unprocessed precious stones, metals and their alloys, gold leaf, semi-finished diamonds, as well as items intended for use in laboratories or industrial settings.
Why is it still worth trying and buying property from a pawnshop?
Firstly, in most situations, interest for 1-2 months of storage is actually quite low and achievable for any working person (of course, in this case not only interest is paid, but also the amount received for the pledged item).
Secondly, you get your item back, and this is very important if it could be very dear to you. At the same time, a good pawnshop always responsibly stores the pawned items, observing all safety precautions.
Thirdly, truly valuable things made of gold or precious metals cannot be compared with the liquidity of ordinary money. Yes, you give back the money and somewhere you encounter new difficulties. But believe me, the gold you get back will only increase your wealth. And money comes and goes.
In general, the most correct attitude towards a pawnshop is rather as a temporary assistant on a long journey in case of some passing difficulties. It is in this case that you receive some money to overcome temporary troubles, but are not left without the main values in your life, since you return them back to your property in a timely manner.
Why do pawn shops buy jewelry?
If buying gold and income from pledging jewelry bring obvious income to the pawnshop, then why buy up valuables is not entirely clear. In fact, the answer to this question is quite simple - ancient coins, precious metals and jewelry are subsequently subject to resale to other buyers. As a rule, for this purpose an auction is held, the lots at which are previously purchased jewelry from the population.
The buyer can be either an individual or a legal entity. The final owner is the one who offers the highest price. After the transaction is concluded, the buyer can dispose of the jewelry at his own discretion: resell, melt down or restore.
Features of the pawnshop
It is impossible to definitely decide where it is more profitable to sell jewelry, bars, coins and scrap precious metals. Prices depend on the specific organization, so monitoring should be done first. Some pawn shops do not accept Arabic gold because it is of low quality. It is not difficult to find such establishments, since their activities are completely legal.
Scrap cannot be sold to other clients, so its price is not so high. Some jewelry stores accept it as partial payment for new purchases. It’s not that difficult to hand over items to a pawnshop correctly. This service is available to all adult citizens of the country. A passport is required. Any jewelry is accepted; the sample and condition do not matter, since the assessment is carried out on the spot. The entire procedure must be carried out in the presence of the client. Products are weighed during this process.
Not everyone understands the price at which gold is accepted at pawn shops. The rates are determined by the Central Bank, and no one has the right to exceed them. All delivered products must be checked for authenticity and absence of counterfeits. Weapons, gold leaf, cartridges, laboratory glassware, and untreated stones are not accepted.
You can return gold jewelry in exchange for money, then you need to repay the debt within the prescribed period, and the jewelry will be returned. This service is convenient because precious metals can be used repeatedly to obtain a loan. A minimum of documents is required from a person, and no certificates are needed for the contract. If you wish, you can take your gold to a pawnshop without returning it. In this case, the client quickly receives money and, upon expiration of the mortgage, is deprived of the right to repurchase the product. In general, this does not impose any consequences on him.
Where is it more profitable to buy and sell gold?
If we compare the prices for purchasing jewelry in a specialized store and a pawnshop, the latter certainly wins, so it is more profitable to buy jewelry and products made from precious metals at a pawnshop. In addition to the fact that the cost of jewelry may be slightly lower, taxes will also be noticeably lower.
As for selling gold, you can profitably hand it over not only to a pawnshop, but also directly to a factory that produces jewelry, but the batch of scrap or gold for this must be quite large.
Jewelry buying
I don’t know where you can donate gold and get money, besides a pawnshop. There is another option - buying jewelry. In such an organization, product evaluation occurs a little differently. Not only the nominal value of the product is taken into account, but also precious stones, manufacturer's brand, design and condition. Therefore, when selling jewelry, buying up offers more profitable options.
The organization is interested in selling unique products, so it is in its interests to buy gold from clients. Compared to pawnshops, buying offers 1.5 times higher than the standard cost. Craftsmen carry out restoration work, and the decoration gets a second life.
It is impossible to say unequivocally where it is better to donate gold: to a jewelry store or a pawnshop. The price per gram of valuable metal will be high if it is in perfect condition. If the jewelry is made by a well-known company and is distinguished by its fine workmanship, then it makes sense to sell it through buying. Experts evaluate not only the weight and fineness of gold.
Basic nuances of completing a transaction
Pawnshops accept jewelry and other valuable items as collateral in accordance with the rules and regulations established by law. Therefore, to complete the transaction, the mortgagor will be required to have a passport. After it is completed, the seller must receive copies of all supporting documents.
As for the number of jewelry that can be taken to a pawnshop, there are no restrictions. But there are some reservations regarding the loan amount. So, for example, if the total cost of jewelry exceeds 600 thousand rubles, pawnshop employees are required to notify the tax authorities about such a transaction. The seller, in turn, in the future tax period must mention in the report the amount of profit received from the pawnshop.
It often happens that during a transaction, any difficulties arise regarding the terms of sale or the conclusion of a contract. In this case, it would not be superfluous to contact the administration of the financial institution, where qualified specialists will answer all questions and help resolve controversial issues.
Some tips
Before going to a pawnshop, you need to carefully study all offers. Not only prices for the metal differ (on average 1,600 rubles per 1 g of 585 gold), but also interest rates. Acceptance conditions depend on whether the product is permanently handed over or returned.
Not all valuables can be sold. Legal pawnshops will not be associated with items prohibited for sale. Acceptance of goods occurs only with a passport. If gold is pledged, it is important to study all the terms of the contract, since the interest rate changes under different circumstances. If you have time, you can try to sell the jewelry yourself. Potential buyers are found on special sites on the Internet. But due to the high level of fraudsters, few people agree to buy gold in private.
If the jewelry is old, then antique stores accept it for sale. But they do not guarantee a quick sale, so you will have to be patient. If you purchase a product, you need to pay a commission to the seller, usually 5-10% of the final amount.
How to invest in gold. We analyze all the options available to Russians
Shares of gold mining companies
Perhaps this tool optimally combines possible risks and benefits from investments.
The logic is quite simple: there is gold as the main asset and there are companies that mine this gold. When the price of the underlying asset rises, the company's shares also rise. If gold becomes cheaper, then there is also a possibility of a fall in the value of shares, but the company can also always increase sales (if such opportunities exist) and maintain revenue. There is another component to this type of investment - dividends; percentage of net profit that is paid to the owner of shares.
Several securities of companies related to gold mining are traded on the Moscow Exchange. First of all, this is Polyus-Gold (PLZL) . Often the shares are of this kind, that is, they are supposedly as reliable as gold itself. But we must not forget that force majeure events occur in any company, and the shares purchased are not gold bullion, and, accordingly, owning a share of a gold mining company may not protect you from serious shocks in the market.
The dynamics of Polyus Gold (PLZL) are impressive: from November 2021 to November 2021, shares more than doubled from 7,000 to 18,000 rubles. News about the vaccine “dropped” quotes to 15,680 (closing 11/12/2020), but the asset remains quite interesting in the medium term.
(POLY) is a major producer of gold, silver and copper. The company's shares reached their highest prices on September 1. At closing on November 12, the shares were trading at 1,675 rubles. Expected dividend payments for the entire 2021 could be up to 4% per annum.
(SELG) is a gold and tin producer. The company's quotes have grown by more than 100% over the year. The main growth potential was achieved not only due to the increase in the value of the main produced asset - gold, but also due to the improvement of corporate governance in the company and the start of dividend payments.
(POGR) is another significant player in the gold market, which entered the Moscow Exchange only in 2021. The company does not pay dividends and, unfortunately, is experiencing a conflict among shareholders, the resolution of which could determine the direction of the company's development.
Pros:
- ease of purchase through any broker;
- shares can grow even with a stable price for manufactured products;
- companies pay dividends.
Minuses:
- force majeure circumstances that may accompany the company’s activities from industrial accidents to tax claims;
- shares can lose value regardless of the cost of the company's products.
Gold futures contract
A futures is a financial contract under which the buyer agrees to buy a certain asset from the seller at a pre-agreed price. The deal is limited in duration.
If the price of the product in the future turns out to be higher than the contract price, then the buyer makes money, since thanks to the futures he will be able to buy the product cheaper than the market, and take the difference for himself. If the value of the asset falls below the agreed value, the futures seller will earn money.
One gold futures is a contract to buy one troy ounce of gold. To purchase a contract, you do not need to invest the entire amount, but only a certain percentage (usually no more than 8%) of the value of the asset. Futures are currently trading for December 2021 - March 2021, etc.
The main risk of such investments is the leverage effect (this is what they call the use of money borrowed from a broker to purchase assets. - Note from The Secret). In April, as a result of the fall in oil prices into the negative zone, traders suffered colossal losses. Due to the leverage effect, losses or gains are multiplied, so futures contracts are not suitable for beginners or long-term investments.
Pros:
- minimal investment can yield potentially maximum revenue.
Minuses:
- high risk;
- The contract is limited in time and is not suitable for long-term investments.
Investments in gold are considered fairly conservative. The media is full of stories about how an investor bought shares of a company and forgot about them for ten years, and when he remembered, he discovered that he had become a millionaire. But few people write about stories of people investing in stocks and finding that, ten years later, they are trading for less than the price at which they were purchased. In this series, gold and precious metals occupy a special place in terms of reliability. People who opened gold compulsory medical insurance in November 2015 earned 100% of the invested funds. Perhaps they could invest their money much better, but would these investments be as reliable?
The material does not constitute individual investment advice. The financial instruments or transactions mentioned may not be consistent with your investment profile and investment objectives/expectations. Determining whether a financial instrument/transaction/product suits your interests, goals, investment horizon and level of acceptable risk is entirely your task.
Method 4. Theft
We're not talking about armed robbers holding a gun to a cashier's head. The main problems pawnshops have are with their own employees. They:
- They accept deliberate forgeries;
- They deceive clients by underestimating their weight;
- Pledged items, in particular with diamonds or emeralds, are redeemed.
The management of such institutions has to make significant efforts to monitor staff and control every transaction. Both clients and receptionists are monitored. The cash register is checked regularly, including unscheduled ones. If forgery or deception is detected, the employee runs the risk that in the future no one will hire him in a similar institution, even as a cleaner.
Method 5. Robberies and thefts in their purest form
Overt robberies in pawn shops are rare. Bulletproof glass and special security systems are installed at the ticket offices. But don't forget about the human factor. A merchandiser or receptionist can gossip with a neighbor, talk about the arrival of a valuable ring or about the presence of blind spots on video cameras. No less “evil” are dissatisfied employees who were fired “undeservedly”. For a fee, they can share the necessary information with criminals.
Particularly clever scammers make copies of unredeemed products and decide to substitute them during demonstration. An accomplice is brought into the case, distracting the merchandiser and asking extraneous questions. But the discovery of such acts inevitably results in a statement to the police.
Method 1. Declare substitution of the collateral
At the time of repurchase of the product, the borrower declares that they are not giving him what he handed over. Experts consider such attempts to be at least naive. Upon delivery, a detailed inventory () is drawn up indicating markings, weight, color of metal and inserts, size, etc. A small comparison is enough to determine whether the client’s claims are legitimate.
History knows several examples when a pendant was listed in the inventory instead of earrings, but they can be counted on one hand. If a disagreement is recorded, there are grounds for filing a complaint with the supervisory authorities. You can submit a complaint on the Central Bank website in the section cbr.ru/Reception/Message/Register.
Method 3. Pledge of stolen goods
Hundreds of apartments are robbed every day, and wallets and jewelry are taken from passers-by on the street. And the biggest stupidity the robber commits after this is going to a pawnshop to sell the “loot.” He hopes that no one asks for receipts from the store confirming the purchase.
But such attempts are quite naive. When investigating crimes, investigators first check purchases. When stolen items are identified, they are simply confiscated along with information about who handed over a particular ring or brooch. You should not hope that the product will be sold in a month or two. Documentation is stored for 5 years.
And the receptionist will try, under any pretext, to get rid of a client with a dubious appearance.
How products are priced
How much does it cost to take gold to a pawnshop? In each such organization you will find a table listing the categories of accepted values. The price will be calculated based on which category your jewelry will be classified into. The following criteria influence the cost of acceptance:
- presence of defects;
- degree of wear;
- design features (modern, outdated);
- presence of branding (Russian, foreign);
- type of product;
- need for repairs.
To verify authenticity, testing is carried out using a rubbing stone: they rub the surface of the precious item, leaving a small amount of gold on the stone. A reagent will be applied to the metal grains, which will determine whether the precious metal corresponds to the declared sample. The receiver may have doubts that the jewelry is gold in its entirety - it may turn out not to be gold, but gilded. In this case, a specific gravity test is carried out. If the specialist still has doubts, he will offer to see through the product. This will deform the jewelry, and you may refuse such tests, just as the acceptor may refuse to accept you.
