From vulnerable people to self-employed individuals. Public opinion of the pawnbroking organizations that make up the Spanish Montes de Piedad Association (Presea) has improved over the last 10 years. Although there is a misconception that these institutions are only approached in times of economic difficulty, the truth is that, due to the terms they offer and the urgency of the money, they have become an increasingly popular alternative option for seeking a loan over traditional sources. like banks. So much so that the number of entrepreneurs using this service who do not have large assets to support is increasing. in crescendo.
At Presea’s extraordinary general meeting, held between yesterday and this morning in Las Palmas de Gran Canaria, the president of the organisation, Ramón Alba, assured that activity was now “linear”, although there was a boom after the quarantine. and currently has over 100,000 portfolios as well as 150 million in assets. He explained that the reasons for using social credit institutions range from satisfying certain whims, getting out of trouble, and financing small and medium-sized enterprises (SMEs) or self-employed workers.
Last year alone, the sector issued a total of 220,000 loans across the state, with an average of between 690 and 700 euros. These are achieved, as vice president Irene Suárez explains, by providing an asset that the debtor can prove belongs to him, which serves as collateral for the organization. Most are gold family jewelry such as rings, bracelets or necklaces; but often high-value jewelry, i.e. unique pieces, are also purchased; or heritage works. All these assets are evaluated by experts and the loan amount is determined. The user’s desired value is usually 70% higher than the appraised value. If you agree, sign the contract and receive the amount on the same day.
“Our product continues to grow slowly at 5% to 10% annually. This shows us that we are another line of credit. We are no longer a last resort,” Alba emphasized. She gave the example of a young man who pawned a Rolex gold watch to start his own company. A company that managed to increase its turnover to the point that a Chinese company found it attractive and decided to buy it. “When he came to collect his watch, he thanked us for our financial assistance,” the Presea president said.
CAN BE EXTENDED UP TO 12 MONTHS
What is the duration of these loans? It is usually 12 months but can be extended for a further period if it is not returned at the end of this period. Once the loan is repaid by paying the principal and interest, the borrower gets his or her jewelry back immediately. Only 3% of customers do not show up to collect their jewelry, resulting in an online public auction.
Thus, the debt is paid off by the relevant reward amount and any additional benefits are provided to the customer, What distinguishes these businesses from other pawnshops is that they are called “social credit”.. The ultimate goal is to prevent the user’s capital from diminishing, so that he has the opportunity to use the montes de piedad instrument again when the opportunity arises.
These organizations are designed to combat usury, as emphasized yesterday by Fernando Fernández, director general of the La Caja de Canarias Foundation, which is part of the association along with seven other organizations. Fernández emphasized that because they are non-profit organizations, they provide “all the benefits to society.” Like? In employment programs, financial education, local development, education and research, culture and heritage, etc. Montes de Piedad not only strives to guarantee access to finance under abuse-free conditions, but also to promote the economic well-being of all layers of society by advising the most vulnerable people on how to prevent them from falling into fraud.