Hong Kong is swamped with handbag backed loans
Typical lenders often as for cars and homes as collateral, not so Hong Kong’s Yes Lady Finance Co., it deals in borrowers’ beloved handbags reports the Wall Street Journal in a feature
The company is in existence sine four years and accepts purses on the spot, bringing in assessors from affiliate Milan Station Holdings Ltd., a chain for luxury second hand purses, to check the bags’ condition and authenticity. Yes Lady Finance provides a loan within half an hour at 80 % of the bag’s value, as long as it is from Gucci, Chanel, Hermès or Louis Vuitton. Occasionally, a Prada purse will do the trick. Second hand classic purses and special edition handbags often retain much of their retail prices. A customer gets her bag back by repaying the loan at 4 % monthly interest within four months. Yes Lady states that almost all of its clients quickly pay off their loans and reclaim their purse.
The company recently lent about USD 20600 in exchange for a Hermès Birkin bag, but Yes Lady’s (translates from Cantonese in Rich Woman) purse backed loans start already at about USD 200 and it caters to residents whose money may be tied up in stock – or luxury accessories.
Hong Kong counts 200 licensed pawnbrokers and over 900 more traditional lenders. The pawn industry enjoys the common form of lending in Hong Kong and primarily targets low income residents and domestic help from abroad. They accept only watches, jewellery and electronics as collateral.
Many Hong Kong residents go to nonbank lenders fro flexibility in loan size and type of collateral. Banks are regulated by the Hong Kong Monetary Authority. Nonbank lenders are subject to the more flexible guidelines of the Money Lenders or Pawnbrokers Ordinance thus Yes Lady doesn’t need to ask customers for proof o income or to undergo a credit check. Only a Hong Kong address and identification card is needed.
One Yes Lady customer brought 40 or 50 Gucci purses at once. The client received a USD 38000 loan and later returned to reclaim the bags he then sold in its own store. Around one in five purse loan customers is male at Yes Lady’s two offices in Hong Kong.
Around 170 independent retailers in Hong Kong primarily are selling luxury purses according to Milan Station’s 2011 prospectus. The company projected that revenue for luxury handbags would reach approximately USD 4 billion in Hong Kong by 2014.
It does not come as a surprise that some customer bring in fakes. Yes Lady will not tell them that they know, but the just say no to approve the demanded loan.