Arising number of company directors and professionals are turning to pawn. Cash4MyCar, a UK-based broker offering short-term loans on cars, is experiencing a significant increase in luxury models as even wealthy customers seek ways to get equity quickly to finance business transactions amid the tough times.
Paul Zimber, operations manager at Cash4MyCar, says: "We have seen a substantial rise in demand for this. Wealthy people are borrowing tens of thousands of pounds and leaving their cars as security. We have found ourselves doing high-class car pawn."
Cash4MyCar was set up as an extension of leading UK pawnbroker TGS. The firm now has around 40 luxury cars sitting in its storage facility including Aston Martins, Jaguars, Bentleys, Mercedes, Porches, plus a selection of vintage models.
Cash4MyCar typically lends 60 to 70 per cent of the car's second-hand value. It charges interest of around seven to 10 per cent a month.
Around 10 per cent of Cash4MyCar clients are company directors. There are also stockbrokers, business owners and a Harley Street doctor.
Around 10 per cent of Cash4MyCar’s clients are company directors
"We never thought this would be the case," acknowledges Mr Zimbler, 39. "We didn't think someone would come in and say: 'I've got a new Bentley, will you lend me money on it?'"
As such, Mr Zimbler says the company has smashed its projected targets, although he won't disclose figures. "Business is doubling month on month. It is considerably larger than what we thought it was going to be by this stage. In addition to our regular clientele we are seeing a lot of wealthy people. We are in a business that we didn't expect to be in."
Why the increase? Unable to secure short-term finance from banks, professionals are pawning their big-ticket possessions to fund quick deals. "There are people who are buying property all day long and then suddenly think: 'Hang on, I've run out of cash'. An opportunity will arise and they need money quickly but are struggling with the banks. We can transfer the money to their solicitors the same day. They then sort themselves out and pay us back.
"These people have a load of cars sitting in their garage so they think: why not?'"
He is also seeing an increasing number of City boys who may have overstretched themselves. "They will come and borrow money one day and then if their trades come off, come back the next to take their cars back."
Cash4MyCar was initially offering small title loans of between £500 and £2,000 but people are now borrowing signifcantly more. Mr Zimbler recently lent £90,000 to the owner of a Bentley.
"The recession is definitely breeding a new type of customer." From one or two enquiries a month, he is now getting up to 40 a day. He says: "You just don't know what's coming but it's definitely getting busier."
As a result, the company has launched a new website, taken on more staff and are expanding. They recently secured new premises in Manchester.
A former car importer, Mr Zimbler joined the TGS Group in 2009 to head up the firm's car pawn division. Established more than 20 years ago by Andrew Lazarus and Spencer Dryer, TGS is one of the UK's leading brokers.
Despite the rise in the industry - the volume of luxury items sold to pawnbrokers in the UK has doubled since 2008 according to some sources -- he believes that the negative connotation associated with pawnbroking still exists. "It has become massively diluted but is still there. We do find that sometimes people can be quite nervous and can't believe they are in this position."
In addition to cars, Cash4MyCar offers loans on motor bikes, lorries, tractors and horse boxes.
Whatever next - people pawning yachts and second homes? "We have had opportunities. We have had enquiries about boats but haven't converted them. And we've had classic cars that people have sitting in their garage for 10 months of the year but don't want to sell. It's asset finance so who knows? Every time the phone rings it could make a great television programme."