Anyone who wants to know how the German economy is performing can count the number of clients that Nikolaus Bode has.
The formula for solving this is fairly simple. If the pawn shops in the small western city of Siegburg aren’t busy, the whole country is doing well. But if people are breaking down his door, it indicates some kind of crisis.
Board is too busy to think about anything this September. In other words, Germany is in chaos. “Pawn shops are an indicator,” Bode told DW. “People come here when unemployment is high or when there are serious economic problems.”
Previously managing property foreclosures, in 1994 he and his father established a pawn shop in the center of a city of about 40,000 people in North Rhine-Westphalia. For that reason, Mr. Bourde has spent his nearly 30 years keeping track of the country’s economic developments. As the owner of this kind of business, rising should make him happy.
“I’ve had a lot of older people coming in, and now we have middle-class members coming in. This didn’t really happen before,” he told DW. has a lot of new clients, in addition to my regular customers, we’re getting people with very variable incomes, and also on welfare who may be waiting until they’re profitable There are people.”
Customers often return items if they didn’t want to sell them in the first place
Short term loan only
The Bode pawnshop in Siegburg is one of around 250 privately owned pawnshops in Germany. One of the oldest trades in the country, the first pawn shop opened in Hamburg in 1560.
For those of you who don’t know, pawn shops work like this: Customers rent valuable items such as jewelry and cameras to pawn shops. A pawnbroker will value an item and lend a percentage of its value to the customer. Usually the customer pays back the money plus interest and fees within her 3 months. If they do not repay the loan, the goods will be sold by the pawnbroker, who will keep the money from the sale.
In a typical exchange at Bode’s shop, someone leaves a gem there and is rewarded with 400 euros ($399.50) as an example. The customer says that within three months he will either take home €448 ($447.50) or lose the jewelry.
But most of the time people give their money back. “The redemption rate here is he’s 96%,” Bode explained. “Most people collect the items they deposit because it’s usually worth more than the cash we provide.”
“The whole point of this is getting a quick loan while keeping what they have. They get more money if they sell the item, but the item is no longer theirs. ” he explained.
9 out of 10 things that end up in Bode’s store are jewelry. But he’s also loaned money to motor yachts, carousels, and even horses, he admits with a laugh. Because this kind of product loses a lot of value very quickly once you use it.
Most of the collateral received by the board is gems
Loans from pawn shops are especially attractive in times of crisis because they are the easiest way to get a quick loan for many customers. In some cases, it’s also the only way. Pawnbrokers don’t ask nasty questions and don’t require credit ratings or payslips. All they want to see is an identity check.
“Banks give you loans based on your credit rating, you have to prove you have enough income, and you have to be vetted,” Bode said. “Collateral is a secondary consideration in banks, but quite the opposite in pawnshops.”
Pawn shops, on the other hand, never offer long-term credit. “It’s too expensive and impractical,” Bode said.
He explained that pawn shops are an option when there are short-term liquidity issues that customers know they can eventually overcome over a period of time.
Changing the image of pawn shops
As Bode’s website puts it, “Quick cash. Reputable, discreet, and competent.”
In fact, discretion is one of the most important qualities of a pawnbroker. This may mean not greeting customers on the street in case they might embarrass you.
However, the public image of pawn shops has certainly improved significantly over the last few years. In fact, vehicle pawn shops are now located in almost every large German city.
“In the old days, people were more embarrassed to come here,” Bode recalls. “And in the end, we had a bad image. Security glass in the windows, dirty business operating in back alleys. But that has changed and pawn shops like mine are now in central It has a place in the pedestrian zone.”
Even consumer advocacy groups no longer look down on pawn shops the way they once did. Still, consumer rights experts warn that this kind of loan is a short-term solution and only a last resort option. They point out that pawnbrokers cannot solve long-term debt problems because of their high fees.
German price hikes sparked protests
Such advice didn’t stop a gang of students from breaking into Bode at work the other day. While in the store, they had a lively discussion about which computer that actually used the most power should be pawn.
It could be a taste of what’s to come, Bourde warned.
Germans pay a monthly advance for their electricity bill, but receive an annual statement that reconciles the cost and the advance based on actual usage. At the end of the billing year, if the consumer has not used as much as they estimated, the utility company can borrow money from the consumer. But it can also be the other way around. With energy prices rising across the board, the arrival of this year’s final bills could come as a nasty shock to many German householders.
“We expect an influx when the final electricity bills finally come and the monthly payments increase accordingly,” Mr Bode predicted. , the amount of foreclosures will also increase rapidly.”
This story was originally written in German.
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