Needy Oenophiles Pawning Prize Bottles Of Wine For Cash

Eight years ago, it seemed like everyone in New York City was operating a hedge fund, and many of those suddenly rich folks splurged on necessities like rare bottles of wine. Then things went sour and these briefly wealthy types had to relocate the contents of their wine cellars to a storage unit. Realizing that cash-in-hand may be more helpful than bottles of wine they may never drink, some are using their prize wine collections as collateral on short-term loans.

One lender-to-the-rich in NYC tells the Financial Times that borrowers aren’t just bringing in a $50 bottle of something nice in exchange for cash. Instead, they are using their vino to back short-term loans ranging into the six figures.

“The loans we are writing on wine are big,” the lender tells FT. “One vintage bottle of Château d’Yquem had a loan offer of $48,000.”

He says his business has already done $4 million in wine-backed loans this year, up from $2 million for all of 2012. The loans typically have interest rates of between 2.5% and 4% per month.

“Most pawnbrokers don’t do this type of lending,” he explains. “They just don’t. They typically lend against gold and fire arms. We don’t go near that stuff.”

Now if you’ll excuse me, I’m going to see if I can trade in my rare bottle of Whitesnake red for half-finished 2-liter of store-brand cola.

Fine wines pawned for ready cash [FT.com]

Fine wine being pawned for cash in New York [The Drinks Business]