Luxury Pawnbroking: Chelsea Entrepreneurs Raise Capital with Bags, Bentleys & Banksys

Lead image: James Constantinou in a promotion shot for Posh Pawn (photo: © Channel 4) 

Imagine a pawnbrokers and wedding rings and broken hearts probably come to mind, but at Prestige Pawn in Chelsea, you’re much more likely to find designer handbags, Banksys and Bentleys.

As well as offering a fast and secure way to raise capital, the Chelsea pawn shop is also a great place to buy and sell rare high-end assets.

‘The other day we bought a really rare Hermes Kelly bag – there have only been two on the market in the last three years. Fifty percent of what we do here is actually buying and selling.

‘Handbags are a special thing for us because we were the first to market them as a way to raise capital, along with art and wine. The Hermes bag is such a rare item, we’re hoping it’s going to reach in excess of £45,000.’

So, if you’re new to pawnbroking, or have been thinking of cashing in your collection of Chanel handbags, where do you start? James guides us through the basics…

How does pawnbroking work? It’s fairly straightforward. Obviously you need the asset to begin with, so if you have an asset of value – a piece of jewellery, a watch, a car – bring it into us, and we try to get the appraisal done on the spot or within 24 hours. If it’s something more complicated like a wine collection, it might take 48 hours, but we pride ourselves on being swift as a lot of our clients need the transaction to be done quickly.

The loan then stands for seven months and there’s no interest to be paid monthly – it’s all done at the end of the term. But you can redeem your asset anytime within that seven-month contract, so in effect, your loan can last just two weeks – simply come in and pay the capital back with two weeks’ interest.

What if you can’t repay the capital? If you get to the end of the contract and you’re not in a position to repay the capital, we try to work with clients to let the loan run a little longer. If the client has some money coming in within the next eight weeks, say they’re selling a property in Spain, we can come to an arrangement.

If we do have to go to market with those goods, we will sell them for the highest price possible, through private treaty or one of the big auction houses. Also, if goods make more money at auction than the client borrowed against them, that balance will go back to the client. If you borrowed, say, £100,000 and at the end of the loan you owe £130,000, but your goods have gone to auction and made £200,000, you will get that £70,000 paid back. We’re fully licensed by the Financial Conduct Authority and that is the law.

Wouldn’t I be better off getting a loan from the bank? With a bank loan you have to pay the whole term interest back whether you repay the loan early or not. Banks also have a lot of paperwork, credit rating checks and set-up fees, which we don’t, so pawnbroking is quicker and cheaper than getting a bank loan.

‘You’d get a taxi from Hatton Garden to Waterloo, but you wouldn’t get a taxi to Scotland. It’s essentially the same principle in pawnbroking’

Think about it like getting a taxi – you’d get a taxi from Hatton Garden to Waterloo, but you wouldn’t get a taxi to Scotland. It’s essentially the same principle in pawnbroking – it’s not a five-year loan, it’s a short-term fix for someone who needs a bit of short-term bridging finance. If you need a long-term loan, then I wouldn’t recommend pawnbroking.

You recently opened up a Chelsea store – how does it differ to your other branches? The Chelsea store is a new venture for us. Up to now we’ve had more of an online presence, which is very strong due to the Posh Pawn TV show, but we wanted something different for Chelsea. Initially we were looking for office premises, but when we looked into it we realised that a high-street presence in Chelsea would be the perfect way for us to sell some of the vintage handbags and high-end watches that come to us though our other stores. We’re not only loaning against these assets, we’re actually buying the same assets. In fact, we buy and sell more handbags than we actually lend against. People don’t tend to use them to raise capital as they would a watch or a car.

What are some of the most notable items for sale in your Chelsea store? The other day we bought two Hermès handbags totalling about £60,000 – and a Ferrari. One of the bags was a really rare Hermès Kelly bag – there have only been two on the market in the last three years. As a business we buy hundreds of bags every month but we’ve never seen one of these in the flesh, so it was a lovely thing to come into the store. It’s a silver bag, actually made from sterling silver and we’re hoping it’s going to reach in excess of £45,000. It’s such a rare item.

How does art fit into the pawnbroking world? Art has been massive in America for a long time as a means of raising capital, and it’s actually one of the reasons I got into pawnbroking. I was reading an article in The Times back in 2009 about America lending against art and how the British were a long way behind. I started looking into the pawnbroking industry and realised it was quite antiquated in its approach to lending, and that’s why I set up Prestige Pawn.

‘One client had a Banksy worth £60,000 hanging on his wall, but he’d never thought about using art as collateral, he didn’t know it was an option’

Art is a massive thing. In the credit crunch of 2008, when people were struggling to get hold of money, they were coming in to see me saying they needed to raise £30,000-£40,000, and I’d say, ‘what’ve you got?’. A lot of clients had art collections they’d built up over the years, one particular client springs to mind who hadn’t been able to borrow from the banks but had a Banksy worth £60,000 hanging on his wall. So he brought that in and we got a deal done, but he’d never thought about using art as collateral, he didn’t know it was an option.

How did the TV show, Posh Pawn, change the public’s perception of pawnbroking? The TV show really opened up people’s eyes to the options out there, and that pawnbroking isn’t necessarily dearer than going to a bank. The process is far quicker and easier as well – we’re not going to into people’s credit scores or through their payslips. And because its almost impossible for someone who’s self-employed to get a bank loan at the moment, if you’ve got a piece of art, jewellery or a vehicle, it’s a really cost-effective way of getting hold of some cash quickly.

I set up Prestige Pawn in 2009 and it was 2013 when the show first came along. We’d had a bit of press before then as we were doing some interesting stuff. In 2009, if you had a second-hand Hermès bag or a Chanel, you probably wouldn’t have thought about selling it on the second-hand market as nobody else was really buying. But when we put it out there with an article in You magazine, we were inundated with people bringing in bags, either to loan against or sell.

Once Posh Pawn was on TV it really added fuel to the fire. Clients were bringing in collections and raising hundreds of thousands of pounds. Handbags are now a special thing for us because nobody else was marketing them as a way to raise capital before, along with art and wine.

What are you top tips for a first-time pawner? It’s all down to the assets. Think about how much you need to raise and how you’re going to get there. If you’ve got lots of assets you could potentially borrow against, choose something that you’re not using on a daily basis and that you’re not sentimentally attached to. That way, if you’re not in a position to pay back the loan, it’s not going to be too wrenching for you to let it go. Having said that, not many people don’t pay us back – only about 16% of the goods that we deal in have to go to market.

Visit Prestige Pawnbrokers Chelsea at Unit 21, Bourbon Hanby Antiques Arcade, 151 Sydney Street SW3 6NT, call 020 3984 4206 or see prestigepawnbrokers.co.uk

Prestige Pawn also has branches in Richmond, Hatton Garden and Loughton Essex