The mortgage loan is a slightly different way to raise a few euros in the short term, if it gets a little short. It is ideal for bridging short-term financial bottlenecks, is easy to complete and usually goes on the stage quickly and unbureaucratically. Often, not even salary statements or even information about the financial situation is needed, because since it is a mortgage loan, a security is offered, which can be accessed by the lender with repayment problems.
All this goes along with the right things, because the settlement is regulated by law, as are the interest and fees. Nobody needs to worry about being pulled over the table by a loan shark, just because it’s a mortgage loan. The prerequisite for this, of course, is that the mortgage loan should also be visited in accordance with reputable homes. And there are about 200 private mortgage lending companies available throughout Germany that are affiliated to the Central Association of the German Mortgage Lending Industry.
The mortgage loan is created by the customer depositing a security of value in the pawn shop. This can be jewelry, precious metal, watches, precious stones, value-resistant porcelain, a hi-tech system, or even a car or its motor vehicle letter. The acceptance of the pledge is at the discretion of the pawn shop, as many have specialized in a particular category of goods in order to better sell the pledge if the loan is not repaid.
The amount of the loan, of course, depends on the value of the asset to be lent. A £ 500 worth of watch will not be enough to land a £ 10,000 credit. As mortgage loans are short-dated, they have a normal life of only 3 months. However, the term may also be extended if the customer so wishes and the corresponding interest and fees for it. These are usually 1% per month. Incidentally, the fees have been fixed by the state since 1961 and have remained unchanged ever since. In addition, there is an additional charge for the storage of the pledge and the loan settlement. If the loan amount is repaid, the customer receives his pledge again.
At 1% interest a month, it may seem that the mortgage loan is far less favorable than the installment loan. However, since it is short-term, to bridge short-term liquidity shortages, it is in the end rather cheaper, and less complicated anyway.
Although most pawns are picked up by the owner, and less than 10% remain in the pawn shop, pawnbrokers turn out to be very attractive sources of income.