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Pawn shop business is booming

Pawn shop business is booming

Pawn shops in Austria have been booming since the financial crisis and while critics say they are taking advantage of the needy, the pawn shop owners say they provide a valuable service for people rejected by banks who need quick cash.

The Austrian Arbeiterkammer or Chamber of Labour that runs the Austrian equivalent of the Citizens' Advice Bureaus is warning cash strapped people that pawning cars or silver is not always the cheapest way to go to get to quick money - with for example hidden charges.

But pawn shop manager Renate Lessiak defended the profession and told the state broadcaster ORF that the people coming to their shops are usually people who need the money immediately.

She cited the case in December of a retired man that came to her shop to pawn a car to be able to buy a new heater. His bank had not helped him - but they did.

The pawn dealer has little red tape to deal with - they simply work out the value of the object put up as security - and the owner gets 50 to 60 per cent of the value in cash.

The owner of the object is allowed to keep it but has to pay a monthly interest rate. How high the interest rate is depends on the broker.

One jewellers shop working as a pawnshop in Villach for example revealed that they charge a 2.5 percent interest rate a month.

Even the Vienna based auction house the Dorotheum has the Dorotheum’s Financial Service - that provides support for those who do not wish to sell valuable objects at auction.

They provide a secured loan service and financing arrangements with the art or other valuables serving as collateral.

A spokesperson for the firm said: "Unlike some places we offer everything in a transparent form on our website"

But Herwig Höfferer from the Austrian Consumer Protection Board warned that not all were as transparent and that many pawn shops hide additional fees before making the deal.

If someone is not able to pay back the money plus interest, they are also risk loosing the object pawned - he warned.

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