How early repayment saves interest on a pawn loan
Where a pawnbroker loan is a single payment due when you redeem your item, interest builds up each month on the loan. Paying some of it off early cuts the loan, so less interest builds up in the months that follow. Paying the whole of it early ends the loan and the interest on that day.
A pawn taken under the Consumer Credit Act 1974 is redeemable at any time within six months after it was taken (section 116(1)), so you can redeem early. Your pawn agreement sets out how much interest is due for a part month and whether there is a minimum charge. The calculator charges whole months of simple interest and has no minimum charge, so add any minimum into the prepayment charge or compare with your pawnbroker's figure.
The calculator can also show a loan where interest is paid each month, or one repaid in equal instalments, if that is how yours works. Pick the repayment type that matches your agreement.
Worked example
On a £500 pawn loan at 5% a month for 6 months, the interest would be £150.00. Paying £200 off after 2 months cuts it to £110.00, which saves £40.00.
Redeeming the whole £500 after 2 months instead ends the loan with £50.00 in interest, which saves £100.00 against waiting the full 6 months. The loan then lasts 2 months.
Paying £100 a month off the loan, with nothing else, clears it in 5 months and saves £75.00. With a 2% charge on the £200 part payment, the charge is £4.00 and the saving after the charge is £36.00.
To see what you owe at the end of a pawn loan and how it compares with the item's value, use the pawnbroker bullet loan calculator.
Before you repay early
Ask for a redemption figure for the day you plan to redeem, including any part month and any minimum charge. Check whether your pawnbroker accepts part payments before the end of the term, and how they are applied to the loan or the interest.
Inputs for the pawnbroker early repayment calculator
Repayment type
One payment at the end is the default for a pawn loan. Pick another if your agreement differs.
Amount you owe
The loan still to repay, not counting interest that is yet to build up.
Interest rate
The rate on your loan. The rate shown is only an example.
Rate is quoted
Choose per month or per year to match your agreement.
Months left
How many months remain until the loan is due, from 1 to 60.
Extra each month
Money paid off the loan each month on top of what is due. Enter 0 for none.
One-off lump sum
A single part payment. An amount that covers the loan redeems it. Enter 0 for none.
Lump sum paid after
Months from now. Enter 0 to pay it today.
Prepayment charge
A charge as a share of what you prepay. Enter 0 if your pawnbroker has none.
CALCULATOR QUESTIONS
Pawnbroker early repayment calculator questions
Can I redeem a pawn early in the UK?
Under the Consumer Credit Act 1974 a pawn is redeemable at any time within six months after it was taken, so early redemption is possible. Check your agreement.
Do I pay less interest if I redeem early?
If your agreement charges interest month by month, yes, because fewer months of interest build up. How a part month is charged depends on your pawnbroker.
How do I redeem the whole loan early?
Enter the full amount you owe as the lump sum and the number of months from now. The calculator then shows the interest saved against waiting for the full term.
Does this include a minimum charge?
No. If your pawnbroker has a minimum charge, enter it as a prepayment charge or compare with the redemption figure it gives you.