Pawn credit, what actually is that?
Here you will find frequently asked questions on the topic of pawn credit.
Pawn credit, as a modern service offering, is nothing to be ashamed of anymore.
1. What do I get for my deposit?
We lend money against gold jewellery according to alloy and weight with a loan value derived from the price of gold.
As the price of gold can be highly variable and variations are unpredictable, we must also reserve the right to adjust the loan value downwards for our customers if the price is falling,
but of course if it is rising, as in the recent past (current in 2012), also upwards.
Anyone who brought a gold jewellery piece to a pawnbroker five years ago
will be astounded to see how much is now offered for the same piece. The price of gold decides it.
Silver, platinum and other precious metals are of course also accepted as a deposit.
Money will be loaned for diamonds by carat, also with a price derived from its market value.
Thus when it comes to jewellery, it cannot be determined how high a loan’s value can be without first assessing
it on site.
For technical pieces we will grant a loan of approximately 25% of the current market value.
The internet helps us find out how much an article costs. For example, if a laptop costs € 499 at one
dealer, and another offers the same laptop for € 399, then the loan would consist of approximately € 100.
2. But isn’t my deposit worth much more? Why can’t I receive a larger loan?
Many customers hope to find the solution to their financial problems with a loan agreement and are then surprised
that, in spite of increased material value and comparison with the new purchase price,
they are only offered a “small” loan. The lack of understanding is especially noticeable when it comes to technology.
A pawnbroker can only offer part of the value of a deposit item, as he/she can only gain a deposit right (i.e. the right to charge interest and costs) for the deposited item. This interest and costs are set by law for loans up to € 300.
When a pawnbroker values a deposit item, he/she already includes these “fixed costs”up to the date of loan expiry or auction because this is the amount that he/she has to regain if the customer cannot pay back his/her loan.
Additionally, we consistently see that jewellery traders calculate prices that are not justified by material value or
work involved. Of course there are also custom-made items which justify a high price, but to demand € 400 or more for a pair of 6 gram wedding rings made from 14-carat gold is downright rude. However, anyone who wants to get married needs rings, and traders take advantage of this situation.
Similarly overpriced are mail-order and tele-shopping orders which are subject to part-payment interest charges or shipping costs. It is also incomprehensible that a piece of jewellery at a brand-name jeweller costs more than a comparable piece in the jewellery department of a department store.
The decline in value of technical objects over the length of the contract which, so to say, must be predicted by the pawnbroker is an additional reason for pawnbrokers being very cautious when granting loans. If a mobile phone costed € 300 and is given as a deposit after six months of usage with scratches on the display, flaking colour or incomplete (e.g. missing data cable), then anyone can imagine that a pawnbroker will have their work cut out for them to find a buyer willing to pay € 75 plus costs at auction. A heavily used mobile phone or DVD recorder with scratches on top will struggle to find a buyer when one can buy the same thing brand new in a shop with a 2-year warranty for € 150.
This is one of the reasons that only a few pawnbrokers grant loans for technical items.
One can say that not only a pawnbroker’s considerations regarding the usability of a deposit contribute to the question “why do I receive so little for my deposit?” probably always being asked, but also the willingness of customers to purchase at a higher price.
3 What loans are even granted then?
We grant loans for precious metals such as gold, silver or platinum with or without diamonds, and we value
coloured stones such as rubies, emeralds and opals. We offer loans for silver utensils such as candleholders, cutlery sets or bowls, and also accept coins.
Pearls and watches are also part of our range, alongside guitars and saxophones.
DVD recorders, colour televisions, video game consoles, mobile phones, computers, electric tools, photo technology, HiFi systems
as well as MP3 players can also be deposited for a loan. For these items it is important that their age does not exceed
one and a half years. These devices must also be submitted with the accessories obtained with the original purchase.
The more complete and shipshape a deposit is given to us, the higher a loan can be.
If depositing a laptop, it is a strict requirement of our company that a purchase receipt is presented.
4 What do I have to do to get a loan agreement?
You must possess one of the aforementioned deposit items, or you can call us to ask if an item you possess can also be deposited for a loan.
You must be an adult and legally competent, and bring a valid identity document (ID card/passport).
You cannot be insolvent or have your assets managed for you.
If you meet these requirements you can sign a loan agreement.
5 How can I get my deposit back again?
If your loan agreement is reaching its end, or if you have previously decided to reobtain your deposit,
you can do this through redemption. Redemption involves repaying the loan amount plus interest and costs. This must take place on site as we do not send any deposit items for security reasons.
You must pay the interest and costs in full for every month that is commenced and not, as is often assumed, for the agreed contract duration (three months). In layman’s terms, if John Smith deposits an item on 7 May, and he wants to get it back
on 15 June, he must indeed be prepared to carry the expenses for two months, but does not have to pay interest
and costs for the contract’s agreed length of three months.
A pre-payment penalty for the early repayment of the loan, as is usual for banks, is not issued by
6 Can I pay in instalments or extend the loan?
Yes and yes.
If a loan can or should not be repaid yet the contract expires, a customer can extend the length of the loan agreement.
Extend means that the loan does not have to be repaid, but only interest and costs.
This will always be calculated for the duration of the loan.
It is often mistakenly assumed that interest and costs are to be paid in advance.
Anyone would realise this if they tried to imagine a customer in a tight financial situation having to pay interest and costs for three months when receiving a € 100 loan.
The customer would justifiably protest, and what would one do if the same customer does not repay the loan
only after three months as assumed, but instead wants to repay after only one month?
Then one would have to refund him the excess costs paid. That would lead to great confusion
and no one would have a grip on the situation.
Therefore: you use the service first and then pay for the duration of this usage.
We also offer our customers the opportunity to pay back a part of the loan when extending the agreement
and thereby reduce the remaining amount and the future costs associated with that.
Customers like to take advantage of this service for higher loan amounts.
Of course in this context one can also receive back a part of the deposit equivalent to the amount of the additional payment if the deposited item(s) can be split
7 What happens when I no longer have my agreement?
If your loan agreement has gone missing, or it has been stolen, or the dog has eaten it or if it is hiding in moving box 4, which is tucked under moving box 6, etc. … then this should not cause grounds for despair.
The length of your loan agreement is not based on the physical availability of your agreement. That is, we can return a deposit to the entitled person even without an agreement, provided identification is presented.
The loss of an agreement in turn however also means that the customer can no longer transfer it
and also no longer has any information on how long the agreement is valid and arising costs.
If an agreement cannot be found, the customer should get in touch with the pawnbroker and notify him/her of its loss.
The agreement can only then be “blocked”, so that it can be ensured that no unauthorised finders obtain
the deposit. Furthermore, the customer can obtain information on the length of the agreement.
Here an appeal: ” Dear customers, please take care of your loan agreements. We do not issue these for fun, and for this reason we would dearly like to have them back when you retrieve your deposit.”
P.S. Customers who regularly misplace their agreements can store them on our premises.
This is free of charge and ensures that only the customer named in the agreement can access it (upon presenting ID) and thus access their deposit.
8 How much does a loan agreement cost?
The interest for a loan agreement always consists of one percent of the loan amount and is shown separately on the agreement. The costs are charged, by law, up to a loan amount of € 300.00 in a table of fees set for the German pawnbrokers’ association.
You can find this table of fees under the heading Terms and Conditions on our website.
When a loan amount is over € 300.00, the pawnbroker is entitled to negotiate the cost amount with the customer,
however the pawnbroker must also abide by the degression requirements in the table of fees.
In other words: up to an amount of € 300, all pawnbrokers charge the same costs. So if you want to compare the services of different pawnbrokers, you should not only rely on the loan amount offered
but also ask how different the costs for an amount over € 300 can be.
9 What happens when my agreement expires?
When your agreement expires you can pay back the loan and collect your deposit, extend the agreement or let your deposit be auctioned.
(see the FAQ topics “Extension” and “Auction”)
In any case, and especially if you are uncertain, you should contact us.
Motto: “We can only protect your deposit from being auctioned if you help us do that.”
10 Are all pawnbrokers the same? Do you belong to other pawnbrokers’ shops?
Yes/no and no.
The company Pfandkredit Neukölln H. Döring & H. Ruks OHG is an independent business and does not currently maintain any subsidiary branches.
We are a member of the German Association for the Pawn Credit Industry (Zentralverband des Deutschen Pfandkreditgewerbes) and consequently have the same terms and conditions as all other member companies.
These companies are recognisable through the copyrighted logo of the association – the stylised P for the German word for ‘deposit’ (Pfand) – which at our company
adorns the front of our entrance, is printed on every loan agreement and is integrated into our website.
11 Can I send somebody to come by?
All deposit items for loans have one thing the same: they must be the property of the customer. Only then is there a right for pawn credit.
Authorisations for submitting a deposit in the name of a third party are allowable when the owner is recognisable and the authorisation corresponds to the legal format.
Anyone wishing to receive authorisation must have unrestricted legal competence, i.e. must be 17 years or older.
We have to reject offers such as ” I would like to trade this for a loan although it’s not mine…” or ” can’t you just write it in the name of my friend?” . We reserve the right to at any time rescind an offer of a loan.
An authorisation is not required to pay back the loan and receive your deposit. The loan agreement is sufficient for this. The loan agreement is transferable and entitles the bearer to re-receive the deposit upon payment of the loan amount as well as costs.
12 Do I always get the same for my deposit?
We wish we could always answer this question with a clear ‘yes’ though unfortunately we cannot do that.
The price of gold fluctuates and technology is falling in price at a rapid pace. To account for all of this, it is important for the loan guidelines to always be readjusted to market conditions.
Therefore your item cannot always be valued the same, but instead it will always be priced according to the current value.
13 How long does an agreement run for?
A loan agreement has a fixed validity of three months‚ which does not however mean that the customer has to wait three months
to pay back his/her loan. An additional month for security is legally guaranteed
for every customer in order to ensure that customers do not lose their deposit only because
they could not retrieve it on the expiry date.
On top of that, we guarantee our customers a grace period. We treat Sundays and public holidays in such a way that they do not count towards a new month, as is allowed, when customers’ agreements expire on a Saturday and they only come in on the next Monday to extend them. Consecutive public holidays are added.
(Example: Sunday 24 December: in this instance the next workday, Wednesday 27 December, is counted as the “old” month)
14 How do auctions work?
When a customer decides not to extend a loan agreement or to pick up the deposit, the item will be auctioned at
a pawn auction.
A pawn auction has absolutely nothing to do with eBay. The auctioneer is sworn and every item must be auctioned off.
Everyone who is legally an adult can take part in these auctions and attempt to get a bargain.
Participants receive a bidder number at the auction house and “battle it out” to acquire a former deposit item with other bidders using the steps put in place by the auctioneer.
There are good opportunities for grabbing a bargain.
You can find more details on the topic of auctions under the heading “Auction” on our website and through the additional link on the website of our auctioneer.