They asked me to do a radio show to know about mortgage loans. Since I wanted to write about this subject for a long time, I searched for a gold necklace I had received 17 years ago, which I had not worn for a long time, and put the city on my neck. I went into some pawn shops, how much credit they give me for my gold chain and how.
The first lesson is that interest rates are low everywhere
Because the big expense is the management fee you charge, maybe the interest is just to get something to advertise.
Everywhere the system worked with the following system:
The jewelry is valued, typically at the price of the crushed gold. It was pretty much the same everywhere, my chain was priced between $ 5,400 and $ 5,750. This is the market price for 14 carat gold now.
They also buy gold as bracelet gold and so-called gold when they want to resell it as jewelry. They are now priced between $ 6,500 and $ 8,000 per gold of gold, which naturally changes with the price of gold on the world market. 14 carat gold means that 14/24 of the chain, or 58.5%, is gold, the rest is alloy metal, copper, copper, silver, etc. Gold gets its color from this alloy, so there are white, yellow and red gold.
How Good Is It To Keep Jewelry Gold As An Investment? I got this chain 17 years ago, then it was 90 thousand HUF. An ounce of gold was $ 279 then $ 237.
Now, if I had sold it, they would have made 110,000 forints today (17-year inflation!), While the price of gold today is $ 1,156 (4.14 times that price!) And the dollar is stronger.
But after all this detours, back to the mortgage.
So they tell you how much your gold jewel is worth, which is about the price of a fair fraction of the market gold. (At least in Budapest.)
You will then need to tell how many months you are applying for the loan, typically 30-60-90 days are available.
You have to be very sensible about how much you say, because they will immediately deduct the handling fee for the day you have chosen from the amount offered.
For 30 days, the average was 1.8%, for 60 days 3.6%, for 90 days 5.26%. (There was a slight difference between pawn shops.)
You’ll get so much less from scratch.
But be careful, because if you do not replace the jewelry in 30-60-90 days or you pay a very heavy criminal treatment cost (1 day delay 3% plus 1.5% per week from the second week and of course the annual percentage rate of interest, which is 11.5-12%.)
However, extensions cost money and no less, 3.9% per occasion.
Is a Mortgage Loan Worth It?
Of course, it has long been a bad idea for someone to take out such a small amount of credit and, moreover, do nothing with borrowing.
But how much does a two month mortgage cost?
I would have received 110,000 for the chain, but 3.6% would have been deducted from it, which would have been 106,000 forints. When I wanted to redeem it, I would have to pay an interest of 11.5% 60/365 / year (or 60/360 if using the French scheme of interest calculation and not German, but later), it would have been 2,079 Ft.
So for 6,079 forints, I got 106 thousand forints for 60 days. This is not a little, but not so much, with an APR of 35-40% per annum, as much as credit card credit. (That’s right, unsecured credit, and that’s a pledge.)
Worse than a credit card, however, is that if you exceed the term you choose, it will be very expensive because of the prolongation, or extension, or the penalty charges.
But the better thing is that you can’t get into a credit trap if you can’t repay the loan, do not tick the brutal interest for up to 5-10 years, doubling your debt plus other penalties every month, but simply lose the pledge. With the market price of the jewelry minus the handling cost, you were no worse off than selling it as a fraction of gold.
Fear of losing family jewelry gives people a better incentive to settle their debt
If I had to choose whether to borrow with a credit card or to pledge something, I would definitely choose the pledge.
(The survey was conducted in Budapest, where there are three pawnshops within 50 meters. Therefore, there was no significant difference in prices, costs, or valuation. This may not be the case in a small rural town. , looking for a serious company.