Peach-colored wallpaper, leather sofas, paintings on the walls in gold frames. At the reception, a girl with a pleasant appearance and voice offers coffee. It seems that this is the quintessence of everything that you don’t expect to see in a pawn shop. Here we need to make a footnote that this is, so to speak, an elite pawnshop. He specializes in precious stones and Swiss watches. “We try to focus on VIPs, on expensive collateral, and on working with high-class values (high class - note from Compare.ru). But this doesn’t mean that if grandma comes and asks for a loan before retirement secured by an old ring, we won’t give it to her - of course we will,” says Pavel Barannik, owner of Lombard 32.
Pavel Evgenievich is the only pawnshop owner who agreed to talk with me. I sent requests to several organizations, since December I wrote to them on Facebook, sent requests by email, but no one responded. Visitors to pawn shops also don’t like to talk to strangers - in the 4 hours that I spent in this establishment, only one agreed to talk about his experience.
Who goes to pawn shops?
Vasily is a student at Moscow State University. He is 21 years old and studies world politics. A couple of months ago I pawned a cross with diamonds and a chain. “I issued a deposit in the name of a friend, I didn’t have a passport with me. Now I came to pay interest with him - almost two thousand rubles a month. Of course I will buy them back. This is a gift from my godfather, and it is dear to me,” shares Vasily.
He needed money to repair his car - he borrowed it from a friend for a ride and hit it. “I urgently needed a large sum, I basically had it, but it wasn’t enough, so I pawned the cross. My godfather doesn’t know about this, no one at home knows - I wouldn’t want to tell them that I hit the car,” explains the student.
Vasily learned about this particular pawnshop from a “colleague in misfortune” who, like him, had once crashed a car. But the young man is already familiar with this method of lending. About three years ago he pawned an expensive watch. I needed money to make a gift. “It was worth it,” the student recalls and immediately clarifies. “By the way, I bought them.”
He planned to buy the chain and cross right away, within a month. But this is the second time he has only paid interest on the loan. “Money is somehow quickly spent on other things, you just spend and spend. But next month I will definitely return the entire amount,” the student says, as if making a promise to himself. True, the voice lacks confidence.
The first pawn shops opened in France. They were founded in the 15th century by moneylenders from the Italian province of Lombardy.
Visitors to pawnshops can be divided into two large segments, explains Alexey Lazutin, president of the National Association of Pawnshops. These are clients who take out loans from pawn shops for urgent needs, and migrants.
“The former are the majority, but it is very difficult to somehow distinguish by gender or age: these are both young people and older people. Migrants, who according to various estimates now number more than 10 million people, often in our country can only use a pawnshop as an institution of financial inclusion,” he says.
Barannik classifies his users a little differently. Some of the most frequent clients are businessmen. “Small and medium-sized business executives aged 35-55 often use pawnshop loans. For example, the owner needs to pay wages tomorrow or the day after tomorrow or comply with some other agreements, but money from contractors is delayed. And then some of his personal belongings are put on bail. And when the funds arrive in the account, he will simply buy them,” says the pawnbroker.
Another type is women aged 20 to 50+ who pawn household valuables and jewelry. “They should not be sold, they are not ready to part with them completely. But they are used as a financial tool to get a loan,” describes the pawnshop owner.
By the way, an appraiser from another pawnshop, Mikhail, spoke about such a client.
– She is a realtor and she periodically needs money for a specific transaction in order to process everything. And when an apartment is bought, she receives her interest and buys the collateral from it. But, naturally, since our economic situation may be different, the money for the transaction may not be paid on time. Well, it begins - she comes, re-pledges the item, brings other jewelry, for the next transaction. Then he buys them back and brings them back. We have been a regular customer for two years now.
Mikhail has about half of these regular clients: “There are clients who have been pawning the same things for years. One of them brings two rings for five years. At my last job I was retired. He loved to drink, and every month on the twentieth he pawned his gold chain and bought it back from his pension. And so on in a circle.”
Another category that I had the opportunity to observe personally is not entirely typical, but interesting: a woman aged 50+, who, apparently, was engaged in jewelry in the 90s and has since kept a certain “compote” of products: “Rolex” and various jewelry with precious stones.
She left the office, where the appraisers were looking at her things, upset and hurriedly headed towards the exit. “We were not interested in these things for collateral, not for purchase - they are of low quality, outdated. Such products need to be handed over only by the weight of the metal,” one of them later explained to me.
There are also those who bring gifts from ex-husbands or boyfriends. “She still had some valuables and gifts in her hands. She comes to us to evaluate all this. And as an option, he either sells it or mortgages it,” Barannik continues to list.
I came to the pawnshop twice. The first time I talked to the owner, I couldn’t find any clients then, the leather sofa and armchairs were empty. A few days later she came again and was “on duty” for about four hours. During this time, four people brought their products or, on the contrary, money for using the loan.
According to Pavel Barannik, influxes occur on Monday and Saturday. In general, here, like everywhere else, there are hot periods - in December, before the new year, at the end of spring and beginning of summer, when the holiday season begins, and in September, when it ends, the next wave comes. As one of the pawnshop employees clarified, on especially busy days 10-15 clients come.
Attention! Danger!
It is no secret that there are so-called buyers who make a living by purchasing valuables, including stolen ones, without burdening clients with the need to draw up documents.
And people who do not want to sell their or other people’s gold to buyers for next to nothing turn to legal organizations to sell their property at a higher price. Not wanting to reveal their identity, they try in every possible way to avoid providing documents: they ask intrusive questions (for example, “Is a passport required in a pawnshop if I never return for my item?” or “Why a passport, I’m in a pawnshop, not in the bank, and brought you everything you need as collateral?”, etc.). They hide their faces, try to make fun of them and persistently persuade them to accept values. Employees should be vigilant towards such clients: it is better to report such cases to law enforcement agencies.
Thus, to obtain a quick loan secured by valuables and antiques, pay off obligations or redeem at a pawnshop, you need a passport or a document legally permitted as identification of the client.
How it works
“If you pay interest on time, you won’t have to repurchase the collateral for years. The item is simply re-pawned and a new pawn ticket is issued,” says Barannik.
If you don’t pay them, then after two months the pawnshop sells them at retail or puts up unclaimed items for public auction in order to return the funds issued (according to the law on pawnshops, collateral exceeding 30 thousand rubles can only be sold through an auction). And anyone can come, make an offer on the price and buy it if it turns out to be the best. In principle, both expensive and cheap things are sold.
Unclaimed jewelry is purchased by both individuals for themselves and individual entrepreneurs for resale. The prices at which items are bought from pawnshops at auction are very different from the prices on the shelves of jewelry stores.
Appraiser Mikhail calls such buyers dealers. “They know where, what pawn shops, what products they have, they call, go, ask if there is anything special. The dealer, as a rule, buys unclaimed products, repairs, restores them, and sometimes melts them down. He can buy it to remove the stones and insert them into another piece of jewelry,” he explains.
But for the most part, pawnshop clients still buy back their pledges. According to estimates by the National Association of Pawnshops, the share of unclaimed items averages from 10% to 30%.
Pawnshops do not have the right to buy. But they may offer to sell the item to a partner organization.
The student was given 20 thousand rubles on credit for his cross and chain. “They could be sold for 2-3 thousand dollars, a cross with diamonds. But they valued it only by the weight of gold, because the stones are small,” says Vasily, but without much indignation or dissatisfaction, in the end he had enough money.
In an antique pawn shop, the client is given three prices. The first is the one that people can get as collateral, in other words, the size of the loan. The second is how much such an item can be sold for cash right away, it will be slightly higher than the first, because the loan amount is always slightly less than the market real value of the item. There is a little reinsurance. Third - at what price can the product be displayed in the store.
“This is the most pleasant amount, but we are not responsible for sales on time. That is, we assume that it can be sold this way. This is an objective price, but no one will give it to you right away. You list an item, it sells and, minus commissions, you receive money. Between these three prices, the difference can sometimes be twofold,” concludes Barannik.
Where to get working capital?
Essentially, a pawnshop sells cash. But where does he get them from?
It is natural to assume that the pawnshop will resort to loans and credits. Then he will “survive” by placing funds at a higher interest rate than he attracts. Roughly speaking, money is bought “wholesale” and sold “retail”.
However, the implementation of such a simple scheme gives rise to banking operations. This follows from the relationship of subparagraphs 1 and 2 of Art. 5 of the Federal Law of December 2, 1990 No. 395-1 “On Banks and Banking Activities.” The decisive condition for such classification will be the percentage nature of borrowings (clause 1 of Article 834, paragraph 3 of clause 3 of Article 835 of the Civil Code of the Russian Federation).
Meanwhile, carrying out banking operations without a banking license threatens big troubles. First of all, the entire amount received as a result of these operations will be charged to the federal budget, and in addition - a fine in the amount of twice this amount (Article 13 of Law No. 395-1). In addition, activity without a license constitutes an administrative offense under paragraph 2 of Art. 14.1 Code of Administrative Offenses of the Russian Federation. Finally, illegal banking activities are Art. 172 of the Criminal Code of the Russian Federation.
Our concerns are indirectly confirmed by letters from the State Tax Inspectorate for the Moscow Region dated November 30, 1995 No. 06-01-1/1765 and dated June 1, 2010 No. 03-11-10/67. The author did not find any direct official explanations on this fundamental issue.
But, according to the author, there are no obstacles to pawnshops attracting interest-free loans. But who will give money for circulation without a business purpose? It makes more sense to place them in a bank deposit. True, interest-free financing can be provided by business owners (participants or shareholders of a business company) - counting on dividends. The other side of this “coin” is that interest-free loans are the subject of state monitoring (paragraph 8, paragraph 4, paragraph 1, article 6 of Law No. 115-FZ).
But a pawnshop can use interest-bearing loans and loans for business activities. For example, invest such funds in equipping public service points and spend them on administrative and managerial purposes. The loan agreement must specify the intended purpose of the funds and ensure that they are spent in accordance with this purpose (Article 814 of the Civil Code of the Russian Federation).
Well, there are no obstacles to lending to the population from the pawnshop’s own funds.
We analyze the terms of the contract
It is also noticeable that if there is a need to extend the deadline for paying the amount to the pawnshop, no problems can arise. To renew the contract, you will have to pay interest and pay a small amount for the renewal. If a similar situation arises for a bank client, this can greatly damage his credit history. Therefore, the choice between a pawnshop and a bank is obvious.
In addition, there is a wide variety of pawnshops, each of which focuses on its own area:
- Jewelry pawn shops. Here they accept jewelry made of gold, silver, and other precious metals, as well as stones, coins, orders, etc.;
- Car pawnshops. You can return the car, get money and buy the vehicle back at the first opportunity;
- Pawnshops focusing on furs and household appliances;
- Organizations involved in issuing loans secured by apartments, plots and other property.
Anyone in need of money and having valuables can use the services of this establishment, which will not only save their time, but also their nerves.
