How pawn shop finance charges are worked out
State pawn rules can state the charge as a monthly rate, as Maine and Oregon do, and the finance charge is the loan times that rate for each month the loan runs. The calculator turns a monthly rate into a yearly one by multiplying by 12, then works the charge out by the day on a 365-day or 360-day year if you count the loan in days, or by the month if you count it in months.
Pawn loans in the US are subject to state law, so the maximum charges and what happens to an unreclaimed item differ from state to state. Your pawn ticket says how a part month is counted. The calculator uses the rate and term you enter and adds no state rule.
The calculator also shows a loan where the interest is taken each month, or repaid in equal installments, so you can see how the repayment type changes the total.
Worked example
Borrowing $500 at 5% a month, which is 60% a year, for 90 days is $73.97 on a 365-day year, or $75.00 on a 360-day year. That is $0.82 a day, and an effective annual rate of 74.99%. Paying off after 30 days leaves $24.66 and saves $49.32.
If the same loan took the interest each month, you would pay $25.00 a month.
To see what you pay at the end of a pawn loan and how it compares with the item's value, use the pawn shop single payment loan calculator.
Before you take a pawn loan
Ask how the charge is counted for a part month, whether there is a fee, and the total to pay if you reclaim early. Compare the effective annual rate with other borrowing. The rate on a pawn loan can be high.
Inputs for the pawn shop loan interest calculator
How interest is charged
By the day with everything paid at the end, a month at a time, or in equal monthly installments.
Loan amount
The amount the pawn shop lends against your item.
Interest rate
The finance charge on your ticket. The rate shown is only an example, so enter your own.
Rate is quoted
Choose per month or per year to match your ticket.
Loan period
How long you keep the loan, in the units chosen next. Installments need months.
Loan period is in
Days suit a loan charged by the day. Months suit monthly payments.
Days in the year
Used when the period is in days. Your ticket says whether it is 365 or 360.
Close the loan early after
In the same units as the period. Enter 0 to run the full period.
CALCULATOR QUESTIONS
Pawn shop loan interest calculator questions
How is pawn shop interest calculated?
If your ticket gives a monthly rate, as the loan times that rate for each month it runs. The calculator also works it by the day on a 365-day or 360-day year if your ticket counts days.
Do I pay for a part month?
That depends on your ticket. The calculator charges the days or months you enter and adds no minimum.
Is the effective annual rate my APR?
Not exactly. A lender's APR is the interest rate plus the fees charged with the loan. This figure uses only the rate you enter.
Does the calculator include state limits on charges?
No. State rules differ, so the calculator uses the rate and term from your pawn ticket.