Paul Aitken has a collection of exotic cars that would make anyone jealous. His current stable includes a Mercedes-Benz SLR McLaren, a Ferrari California, a Lamborghini Diablo, and a Rolls-Royce Ghost. But none of them are Aitken's — they're just biding time in his high-end pawn shop.
While most mere mortals are stuck pawning watches or jewelry or guitars when they're strapped for cash, Aitken, a businessman who hails from England, offers a service that lets people hock their exotic cars in exchange for large sums of cash. His company is called borro, and they have about 200 cars on loan, so to speak, at their New York and London branches.
When someone needs a quick cash loan, and they want to use their Bugatti, DeLorean or Jaguar E-Type as collateral, Aitken is the man they go to.
"You name it, we have it," Aitken told Jalopnik recently. "It's a real mixture of things."
Here's how it works: let's say you're in need of a large sum of cash, and you need it right away. You could bring your Maserati to borro, and they get it appraised. Then they secure you a loan with the car as collateral within just a day or two and without a credit check. It's all about short term, high cost: loans usually span four or five months and can be anywhere from $5,000 to $50,000 or more.
As Newsday notes, borro collects 4- to 5-percent interest while the cars, used to secure loans worth no more than 70 percent of their value, sit in a facility in Long Island that belongs to Exotic Classics, a dealer that sells some pretty spectacular new and used high-end cars. But borro's cars are set aside in a corner distinctly marked "Not For Sale."
It's not just cars, either. As Aitken told Fox Business, people also bring him jewelry, fine art, watches, paintings, antiques and movie memorabilia. Cars are good because they typically come with a lot of documentation, making them easily appraisable. They tend to be newer exotics rather than classic cars, but as Yahoo Autos reported, they do have some classics, and even loaned against a Formula One car in the UK.
But since this is, essentially, a pawn shop, they do have to sell their wares from time to time when people can't pay back their loans. Aitken said it's rare for that to happen with cars, but when they do, they send them to auction, which he says isn't an ideal outcome because they take a hit on auction fees. Selling, he said, is a last resort.
"We don't loan to people who can't afford to pay us back," Aitken said.
Aitken's borro isn't the only company who does this. As the Fox Business story notes, his competitors include UltraPawn and PawnGo, two companies that help arrange financing in exchange for goods online. They offer speed and convenience and cater to business owners.
Aitken says it's a growing business model. Borro started in the U.S. in January 2012, and Aitken said since then they have loaned out $18 million to date. They expect to do $30 million by the end of the year.
So who exactly pawns a luxury car? Though they're not far from New York, it's not the Wall Street type like you might expect. Aitken said they cater to people who have large but somewhat irregular cash flows, and typically need collateral to execute some kind of deal. Many of them are entrepreneurs, and they work in media, sports, and entertainment.
"Often, we get someone who has some kind of opportunity they want to realize and they want fast liquidity," Aitken said. Selling them takes too long, so that's why they go to borro.
Their customers include everyone from property developers and people who in the construction industry to doctors and restaurant owners, and yes, they do get repeat business.
And they tend to be people who have trouble securing large amounts of cash quickly through other means, especially since the recession has meant credit isn't handed out as freely as it used to be.
"No doubt, launching at this time was helpful," Aitken said. "People are looking for alternatives."
But as the economy slowly begins to recover, Aitken said they've actually seen an uptick in business. People are more apt to take risks now than they were two or three years ago, more willing to start a new venture.
Aitken has said his goal is to help borro keep growing with the economy. He told Forbes he hopes to open a California location by the end of the year. So supercar owners on the West Coast who are short on cash, rejoice: he might just be your guy.
Photos credit Borro