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What is pawnbroking?

Verified 11 December 2019 - Directorate for Legal and Administrative Information (Prime Minister)

A pawnbroker is a loan secured by a valuable object (jewelry, painting, etc.). It is different from the sale with possibility of redemption. To apply for a pawn loan, you must bring your item to a municipal credit. After evaluating the item, the institution can lend you an amount between 50% and 70% of its value. You must sign a loan agreement that specifies the amounts to be repaid. If you do not refund, the item will be sold.

The pawnbroker is intended for persons who cannot or do not wish to apply for a conventional loan, in particular for financial reasons. For example, because your income does not allow you to pay the monthly payments.

In this case, you can apply for a pawnbroker loan. There are no resource conditions to access it.

You can get a loan in exchange for a deposit of a valuable item that will serve as a guarantee. We talk object.. You remain the owner of the item.

The property on a pawn loan may be a jewel, a watch, a painting, a musical instrument or any other valuable object.

If you do not repay your loan, the item pledged can be auctioned.

FYI  

if you have a low income, you can also get a micro-loan..

To obtain a pawnbroker loan, you must go to a municipal credit institution.

Only 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
  • The item you wish to guarantee.

The value of this object is assessed by an auctioneer.

In exchange for the deposit of this item, you can 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 wire transfer.

If the loan is refused (or if you refuse the contract), the object is returned to you.

FYI  

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

The loan you can get is based on the item you drop.

The amount is usually between 50% and 70% of the estimated value of the item.

The interest rate varies depending on the amount borrowed. You may also be charged a fee to keep the deposited item.

The interest rate and the cost of care are specified in the contract.

The pawnbroker must be the subject of a written contract between the borrower and the Municipal Credit.

The right of withdrawal shall not apply to a pawnbroker: this means that once you sign your contract and pledge your item, you cannot change your mind.

You have 2 years to repay your loan. However, your contract may be shorter.

You can repay

  • cash
  • or in kind (i.e. by the delivery of an object).
You can repay your loan

If you repay the amount lent to you and the interest within the specified time, you can recover your property. This repayment may be made at any time, from the date of receipt of the loan and the end of the period specified in the contract.

You can't pay it back

Your contract sets a repayment term of less than 2 years

You can request an extension of the time limit up to 2 years at the lending institution. But in order for this extension to be granted, you must first repay the interest on the loan.

In case of non-payment at the end of the period, your object will be sold at auction.The proceeds of 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 proceeds of the sale, you are paid back 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 2-year repayment term

You cannot request an extension. After 2 years, your pawned item will be auctioned. The proceeds of 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 proceeds of the sale, you are paid back if the item is sold at an amount greater than the amount to be refunded. However, if the sale does not cover the amount of the loan and interest, you will not be charged anything.

Warning  

if your debt exceeds €3,000, you cannot pay it back in cash at once.