Pawning diamond jewellery in South Africa can be a quick, easy and convenient way of raising funds.
Let’s take a look at how the process works, how much money you can expect to get out of the deal and whether it’s the kind of transaction best suited to your needs.
How pawning diamond jewellery works
When you pawn diamond jewellery, you are effectively using it as collateral to secure a short-term loan. The key point here is the asset is converted into cash but without being sold.
Depending on the assessed value of the item, the pawnbroker lends you an amount of money that has to be paid back, with interest, over an agreed term.
As the jewellery secures the loan, it is held in safekeeping until such time you have paid off the debt. If you fail to meet your financial obligations, the pawnbroker is entitled to sell the jewellery to recoup the loss.
What affects the value of diamond jewellery?
The value of a piece depends on several factors, one of which is current Rap price of polished diamonds, and the commodity price of silver, gold or platinum.
The Rap price is basically a wholesale benchmark that assesses a basket of diamonds based on four criteria – carat, clarity, cut and colour.
This ‘ball park’ figure that is set on a daily basis, and increases as the stones move through the various distribution channels.
The commodity price of precious metals is determined daily on the world’s stock exchanges, and influenced by supply, market conditions and political stability.
In addition to the market benchmarks, the current demand for diamond jewellery, together with retail competition and market saturation, plays a major role in determining value.
What determines the loan you can get for diamond jewellery?
Pawnbrokers base the amount of money they are prepared to lend you against an estimate of the actual resale value of the piece – the price they are likely to get on the pre-owned jewellery market.
They compare similar items, and make an offer based on the average second-hand resale price.
Much higher jewellery valuations, such as market and insurance valuations, do not represent the real resale value of a piece in current market conditions.
Pawn or sell diamond jewellery?
Consider a few pros and cons of selling versus pawning diamond jewellery.
If the diamond jewellery has no sentimental value and you don’t require the funds immediately, selling the piece may be your best option.
You can get more money for a piece by selling it. However, it takes time to find a suitable sales platform, attract and deal with potential buyers and actually close the sale.
This process can also sometimes involve an element of risk. For example, you might have trouble securing payment, or put yourself at physical risk if you agree to meet with a stranger.
Pawning jewellery at a reputable loan provider unlocks instant access to cash.
You don’t have to part with your precious item. Once you’ve paid back the borrowed money and agreed interest, the diamond jewellery is returned to you.
You can then choose to sell it at a later date – or use it in the future to secure another loan.
Factors to consider before pawning diamond jewellery
Before pawning any asset, it is vital you have means to pay back the loan in full, and within the agreed term. You also have to be prepared to hand the jewellery over, to secure the loan.
Pawning diamond jewellery with lamna
When you pawn diamond jewellery with lamna, you are assured of:
- independent and honest jewellery appraisal
- competitive interest rates that comply with the National Credit Regulator (NCR)
- secure storage of the jewellery during the loan term
- same-day payment of funds into your account
- the services of a reputable and fully accredited loan provider.
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