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Need cash? Own a Bentley? Take a pawn ticket

Walk into the Suttons & Robertsons showroom on the East Side of Manhattan and it looks like any high-end retailer or auction house: necklaces glittering with diamonds, sapphires and emeralds fill the display cases, and sterling silver knives, forks and spoons sit on a wooden table fit for a monarch. In the private room in back are bigger, shinier versions of the jewels out front.

High on the wall is a royal-looking coat of arms bearing the likenesses of two lions, with the date of the company's founding underneath: 1770. Only on closer inspection does it become clear that between the lions are three balls dangling from a hook—the international symbol for a pawnbroker.

(Read more: Wealthy flock to pawn shops)

George Rose | Getty Images

Far from the crusty characters seen in reality shows like Hardcore Pawn and Pawn Stars, this English company has another clientele in mind.

"We focus on the blue-chip, wealthy crowd," said Jeffrey A. Weiss, chief executive of Suttons & Robertsons, which is preparing to open its first New York store this month.

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With almost 250 years of experience in the exclusive world of high-end pawn, Suttons & Robertsons has come to the United States to fill what it believes is a growing need among wealthy Americans who have spent beyond their means and need a quick — and quiet — infusion of cash in exchange for a few cherished baubles they are willing, at least temporarily, to live without.

"There are more and more people who are asset rich and have a temporary liquidity problem," said Mr. Weiss, who at 70 retains the soft Brooklyn accent of his youth. "They're cash constrained. We have the capital to lend up to and beyond $1 million."

Suttons & Robertsons is not alone in the high-value niche of the pawn business.

Websites like Pawngo and Borro sprang up after the financial crash, offering to lend against jewelry, watches and pretty much any expensive item that could be shipped via FedEx. Other sites like Ultrapawn and iPawn came later with the idea of making larger loans, secured by fancy cars, art and gems. Recently, the Beverly Loan Company, a Beverly Hills pawnshop that has been family owned since 1938, opened a second location called the New York Loan Company in Manhattan's diamond district.

Mr. Weiss made a fortune running DFC Global, which operates chains of payday lenders and pawnshops in 10 countries. In the United States, it does business as Money Mart and the Check Cashing Store.

Tight credit makes the timing right for the New York move, he said.

(Read more: Pawn Star: Economy is getting better)

"Certainly conventional lenders over the past five to six years have become increasingly reluctant to advance credit on all fronts," he said. "The time it takes those institutions to make decisions has lengthened as their appetite has shrunk. You can walk into our location in New York and walk out with your funds in an hour or two."

For a fee — a high one — of course. For those who borrow a couple of thousand dollars against, say, a Rolex watch — which seems to be one of the most popular items to pawn — the rates range from 12 percent to more than 60 percent on an annualized basis for online pawnshops and into triple digits for brick-and-mortar operations throughout the country.

The high rates are not high enough to deter clients like Mike Walsh, who buys, renovates and sells homes in the Chicago area. He said he had gone to his bank for loans until 2008 when the process for obtaining one became onerous. After missing out on several houses, he said, he took a couple of his Rolex watches and put them up as collateral for a loan from Ultrapawn. He said the money arrived the next day.

The first loans, he said, were at a rate of 5 percent a month, but more recent ones have been for 3 percent — or 36 percent a year. But to him, it is better than a typical pawn loan. "Instead of paying $1,800 a month for a $10,000 loan I'm paying $300 a month," he said.

That pawnshops exist to lend money to those who fall on hard times is either a necessary or unfortunate facet of life, depending on one's point of view. But how does someone who once had enough money to buy a $450,000 Mercedes McLaren end up pledging it as collateral for a $190,000 pawn loan at a monthly interest rate of 2.5 to 4 percent, as one Borro customer did?

(Read more: Singapore's pawnbrokers gain a new kind of kudos)

Typically, a person pawning an item will have to leave it with the pawnshop and make the monthly interest payments to keep the loan current. To get the item back, the customer must pay the principle and all the interest. Customers missing any interest payments could forfeit the item.

The new wave of pawnbrokers, or collateralized lenders, as they like to be known, isn't just betting that people will pledge cars, planes, or, in the case of one Ultrapawn customer, an earth mover. They are also betting that as long as traditional bank lending remains tight for individuals, there will be repeat customers.

George Souri, a principalat the Atria Group, a private equity firm that invested in Ultrapawn, said his group looked at affluent people as if they were little companies. "When a business needs liquidity to fund operations or growth, they're able to go to the capital markets and use business assets to obtain loans," he said. "The high-end consumer does not have that option. And most consumers in that bracket wouldn't be caught dead in a pawnshop."

Mr. Souri said he had a client with homes in Chicago and Marco Island, Fla., and a Bentley Continental GT for both locations. The client pledged one of the cars, which are worth $250,000 each, to buy a boat for his Marco Island home because he was confident that the cash flow from his other investments would pay off the loan.

In other cases, people simply have too much money locked up in luxury items and not enough cash to pay for things like private school fees or divorce proceedings, both popular uses of high-end pawn loans. One concern among the customers is whether what is beingput up is going to be secure, particularly when it comes to pawn websites where goods are shipped across the country.

(Read more: The world's most expensive divorce settlements)

Todd Hills, founder of Pawngo, says his company, like other online pawnshops, pays to ship and insure the items and that since it is wiring money to someone's bank account, it believes it can confirm the person's identity—to establish ownership just as reliably as someone checking a driver's license in a store.

The high-end portion of the industry is betting that with comparatively lower pawn rates and an ability to fulfill even large loan requests in a day or two, it will be able to build its business on happy repeat customers. Paul Aitken, founder and chief executive of Borro, said he attributed repeat business to the human desire to spend today without thinking about tomorrow.

"Entrepreneurial people like to do things on the spur of the moment, and they're probably not the best planners," he said. "When they have money in their pocket, they like to buy luxury goods. When they don't, they like to use those goods to get money for their next venture."

And that is how he ends up taking a Mercedes McLaren in as collateral for a loan.

--By Paul Sullivan, NYT.com

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