With the credit crunch tightening its grip on available loans, more consumers are having to find alternative ways of raising cash after being rejected by their banks and building societies.
As a result, pawnbrokers and high street stores like Cash Converters are seeing higher numbers of customers entering their shops, in a desperate attempt to stave off growing debts.
Profits have risen at a number of pawnbrokers, whilst Australian outfit Cash Converters has reported that profits were up by 120 per cent in the last six months of last year.
According to National Pawnbrokers Association figures, around 88 per cent of goods pledged are redeemed once the money loaned against the object is repaid. Pawnbrokers loan money in exchange for an item of value, which is held by the pawnbroker as security.
No credit checks are required to secure money in this way, which is proving attractive for the many people now turned down by more traditional lenders – like banks and building societies.
However, as with most short-term loans, interest rates are generally well above average making them expensive – so should not only be used as a last resort to resolve cash-flow and not be viewed as a long-term solution.
But what happens when you’ve sold the antique heirlooms and any remaining items of value, how do you then keep debt at bay?
Debt advice organisations have long recommended seeking impartial debt help, so that the unnecessary sale of cherished property can be prevented. Following their free debt advice, they will usually be able to suggest a number of ways to help resolve financial issues and prevent further debts from developing.
Reputable debt advice companies can provide useful debt help and information on a number of solutions, like debt management plans and IVAs (Individual Voluntary Arrangements).
Debt management offers consumers with a number of debts the opportunity to gather them together into a single and affordable payment. This enables people who are struggling with their finances to regain control, whilst still managing to pay towards their outstanding balances.
An IVA works in a similar way, but is repaid over a set period of time (usually five years). For an IVA to be agreed, it needs the involvement of a qualified Insolvency Practitioner – as a legal agreement is made between the customer and their creditors.
Following the Insolvency Practitioner’s initial IVA advice, they will offer ongoing IVA help and support throughout the full term.
Reputable companies offering a range of debt help programmes include The Debt People, Chiltern Debt Management and Hamilton Locke. These companies offer free debt advice along with being able to provide specialist IVA help and support.
