Before you buy a luxury bag, read this

MANILA, Philippines - It may be mind-boggling for some to discover a Chanel classic flap bag may cost around P150,000, or an Hermes Birkin bag is sold for more than P500,000.

Some women justify spending that much on a luxury bag, saying it's a "good" investment. But is it really?

On ANC's On The Money, blogger Ingrid Chua Go (thebaghagdiaries.com) said when buying luxury items such as designer bags you should buy it because you love it, not because you think it is an "investment."

"Just like in any investment, there's always a risk. When it comes to luxury items, these are things you buy because you like it," she said.

The risks include how often you use the item and how well you care for it.

If you consider it as an investment, Go said you should consider supply and demand. "A lot of people like Hermes Kelly, Birkin bags. They think 10 years down the road, I might be able to sell it for at least more than half of what I paid for," she said.

Go pointed out a classic Chanel flap bag cost about P27,000 back in the 1990s.

"With the peso devaluation and the increase in the cost of production, now it's about P150,000 for one Chanel bag," she said.

Depending on the condition of the bag, Go said one might be able to re-sell a 1990s Chanel bag for about P70,000 today.

Tips for buying 'investment' bags

Go shared some tips for women who are looking to buy "investment" bags.

 1. Find out how much money you have.

"Make sure the money you have is not for school or a necessity. Luxury versus necessity are two different things," she noted.

2. Look for iconic or classic bags.
"Although Chanel has produced a lot of different styles, the iconic bags of these brand houses, they've been there for quite some time. The Hermes Kelly has been there since the 1950s and nothing has changed with the style. A lot of the brands bank on the fact that the style has transcended trends," Go said.

She advised against spending too much on "trendy" bags, which would go out of style next year.

"Make sure it's a classic... Not a graffiti backpack. Go for something that is classy and feminine. Something you will use over time. At the end of the day, you have to know that the bag will travel with you," she said.

3. Do research on the bag you are interested in.

"When buying an expensive luxury bag, I recommend going through the history, the tradition of the brand and knowing it thoroughly before investing in it," Go said.

4. Beware of fraud.

Go noted there are many online scammers who would try to sell you fake bags.

5. Buy from the luxury brand's boutique.

"Don't scrimp. It's an investment," she added.

Reselling your bag

In the last few years, the resale market in the Philippines has grown significantly. Many Filipinas have started reselling their designer goods online.

"There is an over saturation in the market," Go noted.

Stiff competition in the resale market is driving down prices.

Go also said some bags, depending on the condition and market, cannot be resold.

source: www.abs-cbnnews.com

Hermes as collateral: HK firm gives handbag-backed loans

HONG KONG - In designer-obsessed Hong Kong, keeping up appearances can be hard on the pocketbook. One company has an answer: cash-strapped shoppers can get money quickly by pawning their Gucci, Chanel, Hermès or Louis Vuitton luxury handbags.

Yes Lady Finance, a mortgage brokerage, offers loans within half an hour of up to 50 percent of the new bag's value, giving customers four months to repay at an interest rate of 4 percent.

If the client fails to pay back the loan, the bag is sold by the company's retail arm Milan Station Holdings Ltd at one of its second-hand designer stores.

But most people repay to retrieve their prized possessions, said Byron Yiu, Yes Lady Finance's chairman and chief executive.

"Milan Station buys handbags. We give cash to our clients to buy their items for good. And then we realised many clients attach a sentimental value to their bags," he said.

"They don't want to sell them for good but they need money. So we came up with the idea of running a financial company that lets people use their handbags to borrow money ... It turns out to be a very popular service."

Loans start at the equivalent of around $200 and can go far higher, depending on the quality of the bag. This month, Yiu said, one client brought in a crocodile-skin handbag and got a loan for HK$250,000 ($32,200).

"We have both male and female clients. The majority bring relatively posh handbags," he said. "We have seen people bringing several of these handbags here to get a big sum."

Every designer bag is assessed for authenticity by an expert from Milan Station. If it is a fake - which Yiu says is seldom - staff at Yes Lady Finance do not reveal that, shielding the customer from embarrassment by making up another reason for not authorising the loan.

One client, Benson Chan, said his wife owns a dozen luxury bags and he has pawned three of them for a total of $51,500, claiming it was with her consent to get money for investments.

"This is the fastest way to get cash," he said. "Also, my wife wants these bags back."

There are about 180 pawn shops in the Asian financial centre, the website of the Hong Kong & Kowloon Pawnbrokers' Association shows. But Chan prefers the flexibility of Yes Lady Finance's approach for his wife's bags.

"Why don't I bring them to traditional pawn shops? It's because those don't give you any grace period," he said. "Here I can also get my bag back any time."

In central Hong Kong, surrounded by designer stores, shoppers liked the idea.

"I would consider pawning a handbag," said one woman, declining to give her name. She said does not buy as many bags as she used to but still gets three or four a year costing around $4,000 each.

Yiu said Yes Lady Finance makes most of its money by broking mortgages but the handbag business is growing fast and carving out a niche in the pawn industry across Asia.

source: www.abs-cbnnews.com