Hong Kong company provides loans, takes designer handbags as collateral

Need a big loan in Hong Kong? That will be two Gucci bags and a Louis Vuitton clutch, thank you very much.

Reuters reported this weekend about a company in Hong Kong that is capitalizing on a culture where designer bags fill closets, even among residents who are short on cash. Mortgage brokerage Yes Lady Finance accepts pricey bags as collateral for loans, the news wire reported, and some customers have traded three or four in exchange for a temporarily thicker wallet.

One woman took out a loan of about $32,000 using a crocodile-skin handbag this month, according to the news wire.

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The company boasts it takes no longer than five minutes to approve a loan, so long as the borrower is willing to loosen their grasp on a handbag made by Gucci, Chanel, Hermès or Louis Vuitton, and sometimes Prada, according to the Wall Street Journal.

Customers have four months to repay a loan worth a portion of the bag's value, with interest, and if they don't, Yes Lady Finance sells the bag at to its affiliated second-hand store.

However, the chairman, Byron Yiu, told Reuters most customers do repay their loans because they don't want to permanently give up carrying those designer bags on their arms. And if the bags are knock-offs, the company told media it doesn't declare fraud on the spot, it simply declines the loan without telling customers the item is fake.