Citizens’ purchasing power is decreasing, and needs do not change as quickly, so money is kept in wallets for less and less time. Due to the numerous conditions prescribed by banks, not everyone can take out a loan and thus solve current financial problems, and getting to “cash” can sometimes be difficult. One of the options for a quick loan is visiting pawnshops, although this model is not very popular, and many economists do not recommend it either.
Pawn shops in Serbia are shrouded in a certain veil of mystery and many prejudices are often attached to them. On the other hand, in Europe and the world they are legalized and operate according to strictly defined regulations.
Biznis.rs spoke with the owners of two pawn shops in Serbia, who agreed to explain their business model to us, but with the request that we not mention their identities and company names.
“The working principle is very simple – the client pledges something and receives a loan in the name of the pledged person. Pictures, statues, antiques, gold, precious stones can be pawned. It’s less often cars, because enforcers place a ban on vehicles without notice, so even the owners don’t know about it”, says our interlocutor, adding that everyone comes to the pawn shop.
“From ordinary people, workers, through businessmen, entrepreneurs and sportsmen, to people from the entertainment industry. Everyone needs some funds, some less, some more. I had a situation where a man took his watch off his wrist and pawned it to pay the workers on the construction site, so that they would not leave and he could continue his work. A well-known sportsman used to come, he pawned some valuables to get money for gambling,” explains the owner of the pawn shop.
Our interlocutors say that they sign a contract with the party, and that they are not doing anything illegal, but that the banks or the state do not stand behind them, which makes their work difficult and casts doubt on their activity.
“With us, discretionary rights are guaranteed and many people come to solve their current financial problem.” Thus, merchants come to buy goods with money from the pawn shop, parents to educate their children, and even pensioners. In the world, this type of business and service is quite normal. Of course, we conclude a sales contract with the right of redemption”, our interlocutor points out.
The contract with the right of redemption is fixed for a month or two, it can be longer, and when that time expires, the client should come to collect the pledge. The interest rate ranges from three to five percent.
“The less money, the less interest.” We do everything according to the law, there is a company stamp on the contract, and we regularly pay taxes to the state. I have authorization for commission sales if the pledge remains, as well as a certificate from the Directorate of Measures and Precious Metals that I can trade in gold. Those who are not officially registered in the APR finish their work very quickly, because that means they are working illegally”, explains our source and adds that 10 to 15 percent of people do not return for the pledge, Biznis writes.