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The SMF has found that a common reason people use pawnshops is to get cash which is used for household essentials – including food and rent – usually at the end of the month. , when they run out of money, adding that loans secured by pledged goods are usually less than £100.

One respondent said, “I need this money to be able to buy food. It’s as easy as buying food.

Another person added: “Usually it’s for food and bills. It’s closer to the end of the month if I’m struggling or if it’s been a long month.

Asked about the potential impact of pawnshop closures, respondents said alternatives included going without food, heating, using door-to-door moneylenders or payday loans.

Some have expressed concern that if their local pawnshop were to close, they could not afford to travel to the nearest alternative store in another city or region.

One person explained, “It would have a bad effect. If I have an emergency at the end of the month or need to run errands for a week, that would be for me and my husband not to eat much. It would be the same with the limitation of the consumption of gas, water and electricity.

Jake Shepherd, SMF researcher and author of the report, said: “After speaking directly with customers, I’ve learned that pawnbrokers can play an important role in people’s financial lives. When we need a financial safety net, many of us take credit cards, bank loans, and even savings for granted. But these are luxuries that not everyone has access to.

“For low-income people, alternatives to pawnbroking can be even riskier and more expensive. In a credit environment where options are already limited, the closure of pawnshops could be devastating for some customers.

“As the cost of living continues to rise, policymakers should recognize the importance of credit for low-income people and consider improving the borrowing options available to them.”

SMF director James Kirkup said it was a “simple fact of life” that some low-income people needed credit to manage their expenses.

He said: “We might wish to live in a world where wages and benefits are higher and people don’t need to borrow money just to make it to the end of the month. But unfortunately, this is not the case, so some low-income people do indeed borrow just to get by. Politicians and regulators should pay more attention to this fact and give more thought to how to ensure that the credit market for low-income customers works better and more fairly.

Ray Perry, CEO of the National Pawnbrokers Association, explained that people from all walks of life use a pawn shop when they have gaps in their cash flow.

He added: “We at the NPA are concerned that the attitude of banks towards the pawnbroking industry, based on outdated perceptions, is a major reason for the decline in the number of pawnbrokers. .

“The sector is highly regulated which is much needed as evidenced by the SMF and we are working with UK Finance, the banks, the FCA and HM Treasury to change perceptions, particularly where the need to borrow small sums increases due to inflationary pressures on food and energy costs.

It comes as new research from the Food Foundation shows that more and more families are struggling to pay for food due to the cost of living crisis.

“The situation is rapidly changing from an economic crisis to a health crisis,” said Anna Taylor, executive director of The Food Foundation. “Food banks cannot be expected to solve this problem. The government needs to realize that the boat is sinking for many families and needs to be fixed.

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