"Defaulting" on Pawn Loans

MAbdi

Hi all,

first of, apologies if this has been asked before.

I have a Pawned some jewelry with Albermale & Bond more than a year ago and have been renewing the agreement every six months. By now, I have already repaid more than the initial value that I borrowed back in interest. My latest renewal date is coming soon and I am thinking to ask A&B to simply auction the jewelry off and I am happy to pay the difference if they receive less than my outstanding balance for it.

I can afford to pay the current accrued interest and renew, however, I cannot repay the principal at once and somehow do not see any point in renewing (I would be cheaper off buying new jewelry sometime in future, especially considering that I have already paid back a lot). That being said, I am conscious of not ruining my credit report by putting a default on there (I have never defaulted before).

My question is, does anyone here know if asking A&B to auction the jewelry off would constitute a formal default and if that would be reported to the credit agencies as such?

Thanks for your help in advance!

[Deleted User]

As far as I'm aware, if you don't make the payment the pawn shop just keep the item and sell it - there's no default and no money owed if it sells for less than they loaned you.

This is why pawn shops generally only offer 50% of the items value at the very most.

There's no chance of anything going on your credit file as they don't report to the CRAs.

I would just let them know you want to end the agreement and they can keep the item(s).

bengal-stripe

MAbdi wrote: »

My question is, does anyone here know if asking A&B to auction the jewelry off would constitute a formal default and if that would be reported to the credit agencies as such?

You cannot default on a loan from a pawnbroker; the pledge you have supplied is the firm's security. A loan from a pawnbroker will never appear in your credit file.

If you do not redeem the pledge in time (or extend the contract by paying all the charges that have occurred so far), the item will be sold at auction. If the item achieves less than the monies you owe, that's the pawnbroker's risk. If it achieves more (unlikely, as there will be additional auction costs to be added) you are entitled to any surplus.

justjohn

Correct me if I am wrong, but surely on renewal its only the initial borrowed money that is owed?

Further more I assume the pawn broker price is based on scrap value at 50%?
Thus if you can pay the initial borrowed amount off(beg borrow or steal) You should be able to take it straight to a good jeweller and get full scrap value for it?(double what you paid pawnbroker?) That's without taking into consideration scrap gold price rise/fall.

Someone correct me if I am wrong?

bengal-stripe

You take an item to the pawnbrokers because you believe in a few weeks/months you have the money to redeem the item. If you want to sell the piece, here and now, there are other avenues which will give you more money.

If you want to get the best possible price for a valuable item, you might place it into an auction yourself, but it could take months until you actually receive the money.

The advantage of the pawnbroker is you'll have cash instant, but you will never get the best possible price.

fermi

Looks like this company isn't doing so well themselves.

http://www.credittoday.co.uk/article/16874/online-news/albemarle-bond-mulls-future-as-it-suspends-shares-trading