Consumer finance: UK borrowers turn to pawnbrokers
Pawnbroker Borro.com has found some interesting facts about its customers. They are not who you think they are, they are not borrowing for the reasons you think and they do not adopt the payment patterns you expect. But there's still a nagging question .... why?
According to Borro.Com, the cost of a holiday in Majorca for a British family of four is just over GBP1,000. Since June this year, 30% of customers have given "to pay for a holiday" as the reason for the loan and the average amount has been GBP1050.
Pail Aitken, the company's CEO, says that the profile of borrowers is very different from the received wisdom of the industry with "young professionals and families" being customers. But the picture underpins a disturbing story: "our customers are telling us that in these difficult times were are among the most readily available and reliable sources of short term finance around."
For that read, simply, that customers have already maxed out their credit cards and other pre-arranged lines of credit. The company says "Borro.com's innovative online service allows people to discretely and easily obtain short term loans of GBP100 - GBP100,000 secured against valuable items. The online operation is attractive to customers from all walks of life and reflected in the fact that 75% of Borro.com's customers are first time users of pawn broking or asset lending services. "
Borro's USP is that customers can call them and a shipping pack is sent to the customer; the company then appraises the goods and makes an offer; if the offer is accepted, the money is lent. This process removes some of the "instant hit" of traditional pawnbroking and therefore provides for both more considered decision making as to whether to borrow the money and, also, removes those that need money instantly - and are, therefore, arguably, a higher credit risk.
The company says that its service belies another popular misconception about pawnbroking and that 90% of its customers redeem their pledges at the end of the contract.
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