The crisis fills Germany’s pawnshops

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More and more people in Germany are struggling to cope with the price boom. Many turn to pawn shops for cash.

Anyone who wants to know how the German economy is doing has only to count the customers at Nikolaus Bode’s pawn shop. If few customers come to his shop in Siegburg outside Bonn then the country is doing well. But when customers flood the pawnshop, then everything shows that Germany is experiencing a crisis. This month Nicolaus Bode’s pawn shop is full: “The pawn shop is an indicator. People come when there is high unemployment or serious economic problems,” says Nikolaus Bode.

Previously, the German businessman was active in the auctions of foreclosed properties. In 1994 he and his father set up the pawn shop in Siegburg, a town near Bonn with a population of around 40,000. Nikolaus Bode has been measuring the economic pulse of the German economy for almost three decades. The coming crisis will undoubtedly benefit the pawnbroker. However, he expresses serious concerns:

“Many elderly and now middle-class people come to our store, which was not the case before. In addition we have many new customers. In addition to regular customers, we also have people with unstable incomes, but also people who receive social benefits, who are looking for financial support to make ends meet.”

“Almost 96% of customers get their pledge back”

Nikolaus Bode’s shop is one of around 250 private pawnshops in Germany. The profession of pawnbroker is one of the oldest in Germany: The first German pawnshop was established in Hamburg almost 500 years ago in 1560.

In general, pawn shops work like this: They give a certain amount of money for items brought to them by customers, who have three months to pay back the price plus interest and fees and collect the pawn. An example: Nikolaus Bode gives a customer 400 euros for a piece of jewelry. After three months, the customer in question returns 448 euros to him. Otherwise the valuable item is auctioned off. The German businessman states: “Almost 96% of customers get the pledge back because it is worth more than what we give them for it. The consideration we give is a fraction of the actual value of the pledge and people want to keep it. Otherwise they could sell it in the first place.

Nine of the ten valuables that end up in Nicolas Monte’s safe are jewelry. But he has loaned customers who brought a craft, a carousel and even a horse. As the pawnbroker says, he avoids devices such as mobile phones, because their loss in value is too great.

Cash, easy and fast

But what makes pawn shops so attractive, especially in times of crisis: For many people, it is not only the easiest, but also the only way to find money: No bills, no unpleasant questions, just showing ID.

“Cash immediately, discreetly and professionally,” says the Bode Pawn Shop website. Primarily discretion is in Nicolaus Bode’s priorities. Which means, as he says, that he doesn’t greet customers, even if he meets them on the street, so as not to possibly embarrass them. And all this despite the fact that the reputation of pawnshops has improved significantly in recent years in Germany. Pawnshops specialized in cars now naturally belong in every city of the country.

Observing the increased traffic in his business, Nicolaus Bode speaks of a small foretaste of the coming weeks and months. “When the electricity bills come I expect customers to increase. The same will happen with real estate auctions, as many people will no longer be able to pay off their mortgages.”

Deutsche Welle

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