Financing the Designer Handbag

For some, however, the passion to accessorize outstrips their ability to finance it. The Wall Street Journal recently reported about the rise of certain non-bank lenders that actually offer loans based on the collateral of a woman’s handbag. “Yes Lady Finance Co.” is willing to lend up to 80% of the value of a bag by Gucci, Chanel, Hermès or Louis Vuitton. Sometimes it will consider Prada. While this business is essentially a pawnbroker, pawnbrokers typically target poorer residents and foreign domestic workers. Yes Lady targets the affluent Hong Kong woman who wants to quickly access financing to acquire the latest “must have” bag. And with interest rates well below 10%, what is not to like? In order to get the purse back, the loan must be repaid in four months. Apparently, almost all clients do exactly that. Perhaps by borrowing against another bag?