A London-based “high-class” pawnbroker who just surpassed £50 million ($85 million) in short-term loans made against luxury assets says more rich people are turning to his business as an alternative to banks. David Sonnenthal, who is also a TV personality on the Channel 4 show Four Rooms in the UK, works at the high-end of what has traditionally been seen as a shady business. This year, his single store, New Bond Street Pawnbrokers in London’s affluent Mayfair, is celebrating 15 years in business and has just breached the $85 million barrier in short-term loans made against luxury assets owned by the elite.
The global recession and the demise of major banks has meant financial institutions in the UK, as well as elsewhere, have been reluctant to lend large sums of money in recent times. Now wealthy individuals have a viable alternative – they can loan money against expensive possessions interest free.
“The average loan is £30,000 ($51,000),” Sonnenthal told Guardian Liberty Voice. “Unlike poor people, rich people are not borrowing the money to survive – they are borrowing it to buy what they want. A lot of the time, the money goes on legal fees because they have so many deals in place.”
Although Sonnenthal’s firm prides itself on discretion when it comes to clients, he did confirm that almost all are self-employed paper millionaires. “If you buy watches that cost in the high thousands or thereabouts, you have to be (a millionaire),” Sonnenthal added.
High street pawnbroking has long been frowned upon as an industry that takes advantage of the needy. However, Sonnenthal said his one store has been at the forefront of modernizing the industry by focusing on what has been dubbed “high-class pawn” for the elite.
Sonnenthal said some 40 per cent of his business is made up of returning customers and around 70 per cent of the pawned items are returned to clients. He has loaned money against Napoleon Bonaparte’s former possessions, items retrieved from the Titanic, along with a raft of Elvis Presley memorabilia.
“Yes, we are cleaning up the image of pawnbroking,” he said. “We stuck to our guns and did not lend against gold. I’m not saying there is anything wrong with gold. We weren’t ready for the 20-person footfall coming in at a time and certainly were not equipped for it so we catered for the higher end. It means we get three or four people a day if we are lucky.”
However, Sonnenthal admitted he is glad his business shied away from gold as that precious metal was responsible for the demise of some of the biggest high street pawn chains. “Albemarle & Bond and Herbert Brown went into administration,” he said. “Not only were there lots of stores, price of gold dropped. That’s the problem with gold – it’s like shares. One day the price is high, the next it is low. It is unpredictable and so poses high risk when you deal in it. Pawnbroking and our industry, along with prostitution, is the probably the oldest business in the history of the world and we can already see others moving into our space – the one of pawnbrokers to the high-class and elite.”
By Robert Shepherd