NZ's first online pawnbroker
The first-ever online pawnbroker has set up shop in New Zealand, but Kiwis are still wary of the stigma around pawning possessions.
In another example of the internet chipping away at bricks-and-mortar stores, online pawn shops have taken off in the United States and United Kingdom in recent years. Patrons prefer the discreet service and convenience of not having to leave the house, or visit a dodgy suburb.
Now Plej has brought the practice to New Zealand, acquiring physical premises in Queenstown in April after launching a website late last year.
It offers short-term loans of $100 to $10,000, secured against the likes of jewellery and watches, sports gear, collectibles, art and antiques.
Company founder and director Samantha Bell said she saw an opportunity to rejuvenate one of the oldest forms of lending in a new format. "There were online pawnbrokers in the UK, States, Canada- but nobody was doing it in New Zealand."
Plej offers three-month loans which incur monthly interest of 10-20 per cent, depending on the amount borrowed.
That works out to a total of $300 of interest on a $1000 loan, or $60 on the smallest available $100 loan, for the three-month term.
After proving their identity, customers are sent courier bags to ship their items to Queenstown, where they are valued and securely stored. At the end of the three months they repay the loan to have their precious items couriered back to them.
By law, anything that isn't reclaimed has to be sold either at an auction house or through sites like Trade Me.
Unclaimed items under the hammer currently include a digital camera, wedding and engagement rings, and Rosewood furniture.
Bell said most customers recovered their items, though some chose to extend the loan for a longer period.
Plej was a responsible lender, she said.
"It's useful for the right audience - it's not ideal for everybody.
"You're only putting at risk the item, you're not risking getting any further into debt."
Bell said it had been difficult to get people to overcome the stigma around pawning goods, including the perception that it was unaffordable and they wouldn't get their items back.
"They're not understanding just yet that it's accessible to more mainstream customers."
She said those borrowing only a few hundred dollars were often travellers arriving in Queenstown who hadn't yet lined up a job, or were waiting on their first pay packet.
Locals tended to borrow a bit more, in the $300 to $2000 range, often for unexpected expenses such as medical bills or vehicle repairs.
Anything above that amount tended to be tradespeople and small to medium businesses managing cashflow problems, said Bell. "They're often reliant on a large customer cheque coming in, and it's been delayed or what have you."
While the business was still in the early stages, in time Bell hoped to start lending against cars, boats and other vehicles through a network of agents or franchises in other cities.
Federation of Family Budgeting Services chief executive Raewyn Fox said pawnbroking was not a big concern for her organisation's clients.
"It's something I can say has rarely reared its head as an issue for us."
She said it was essential for borrowers to make sure they fully understood the fees and interest rates they would be charged before they entered an agreement.
"If you're not 100 per cent certain you've got the money, you need to be prepared to lose the goods."
- Sunday Star Times
How should the council plug its financial black hole?Related story: Council coffers fall short for rebuild funding