State-owned pawnshops: Credit conditions close to usury

In addition to private pawnbrokers, there are also some public pawnshops. Citizens can lend money there against the deposit of collateral and bridge financial bottlenecks. However, state-owned lending companies are by no means classed as “social institutions”. On the contrary, the conditions are so unfavorable that the limit to usury can only be recognized with great effort and goodwill.

Borrowing euros

Borrowing euros

For example, the Purocalms calculates an interest rate of 1.0 percent per month for all loans. This is the interest that private pawnbrokers demand – it is also the maximum interest rate allowed by law. On top of that come horrendous fees that are at least as high as the interest rate itself and often go far beyond that. Anyone borrowing 1000 euros for three months against the deposit of a wristwatch in Mannheim must pay a total of 90 euros. This corresponds to an annual percentage rate of more than 35 percent. Officially, 30 euros interest and 60 euros fees are payable.

Short term loan

Short term loan

Even with larger amounts of credit, the pawn shop knows no mercy: 10,000 euros credit over three months cost a total of 600 euros each 300 euros interest and fees. The annual percentage rate is then about 25 percent. This interest rate applies even with the maximum possible loan amount of 100,000 euros, for which a total of 6,000 euros must be paid for a three-month term.

The pawn shop Mannheim sees his activity as a social mission, which is to help people in financial difficulties. By no means, so it says on the homepage, an emergency should be exploited to earn money.

The comparison with private pawnbrokers shows that the conditions of the public offers are significantly less favorable. In one point, however, the Pfandhaus Mannheim can still claim to be a trustworthy authority in the manner of a private lawyer: While private competitors also open in the evenings and on weekends, Mannheim prefers to follow regular working hours and stands by the Available from Monday to Friday from 8.30 to 16.30.

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