What is pawnbroking?

Verified 10 December 2021 - Directorate for Legal and Administrative Information (Prime Minister)

Do you need money urgently? Loan on pawn can be a solution. It is a loan granted to you in exchange for the deposit of a valuable object (jewelry, clothing, painting, etc.). To apply for a pawn loan, you must bring your item into a municipal credit. The property evaluates the item and offers you a loan for between 50% and 70% of its value. If you pay back on time, the deposited item will be returned to you, otherwise it will be sold.

The pawnbroker loan is intended for people who are unable or unwilling to apply for a loan from the bank or a financial institution. For example, because your income does not allow you to pay the monthly payments or because you are registered at the Banque de France.

There is no means test to obtain a pawnbroker loan.

You will be able to get a loan in exchange for a deposit of a valuable object that will serve as security. We're talking pledged item. You remain the owner of the object.

The property on which a pawnbroker loan is granted may be a jewel, watch, painting, musical instrument or any other valuable object.

If you don't repay your loan, the pledged item can be auctioned off.

FYI  

if you have a low income, it is also possible to get a micro-loan.

To obtain a pawnbroker loan, you must go to a Crédit Municipale establishment.

Only the Crédit municipal offers this type of loan. You can't go to your regular bank.

You will need to present the following:

  • ID
  • Proof of domicile
  • Item you want to guarantee

The value of this item is estimated by an auctioneer.

In exchange for the deposit of this item, you will be able to get a loan immediately.

If the loan is granted, you will have a contract to complete and you will receive the agreed amount in exchange for the item. If the sum exceeds €3,000, it will be paid by check or by transfer.

If the loan is rejected (or you refuse the contract), the item is returned to you.

FYI  

for some items, you may need proof of ownership (for example, an invoice in your name).

The amount of the loan you can get is calculated based on the item you deposit.

It is generally between 50% and 70% of the estimated value of the object.

The interest rate varies depending on the amount of money borrowed.

You may also be charged a custodial fee for the dropped item.

The interest rate and the fee for child care are specified in the contract.

The pawn loan must be the subject of a written contract between you and Crédit municipal.

The right of withdrawal does not apply to pawnbroking: this means that once you have signed your contract and pledged your item, you can no longer change your mind.

But, if you wish, you can refund the amount remaining to be paid and recover the deposited property.

You usually have 2 years to repay your loan, but the contract may be shorter.

The refund can be made in cash or in kind (i.e. by delivering an item).

You can pick up the pledged item after the refund.

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You can repay your loan

If you repay the amount lent to you and the interest within the time limit, you can recover your property.

This repayment can be made at any time, from the date of receipt of the loan and the end of the period provided for in the contract.

You can't pay it back

Your contract has a repayment term of less than 2 years

You can request an extension of the deadline up to a maximum of 2 years from the lending institution. But for this extension to be granted, you must first repay the interest on the loan.

If you do not pay at the end of the period, your pledged item will be auctioned.

Proceeds from the sale are used to repay the loan and interest.

You won't have to pay anything more.

If there is a surplus of the sale proceeds, it is returned to you if the item is sold for more than the amount to be refunded.

However, if the sale does not cover the amount of the loan and interest, you will not be asked for anything.

Your contract sets a repayment term of 2 years

You can't ask for an extension.

After 2 years, your pledged item will be auctioned.

Proceeds from the sale are used to repay the loan and interest.

You won't have to pay anything more.

If there is a surplus of the sale proceeds, it is returned to you if the item is sold for more than the amount to be refunded.

However, if the sale does not cover the amount of the loan and interest, nothing will be charged to you.

Warning  

if your debt is more than €3,000However, you can't pay it back in cash at once.