How pawnbroker loan interest is worked out
Where a pawnbroker quotes interest as a monthly rate, the interest 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 out interest 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.
A pawn taken under the Consumer Credit Act 1974 is redeemable at any time within six months after it was taken (section 116(1)). How interest is charged for the time you have the loan, including a part month and any minimum charge, is set out in your pawn agreement; the calculator charges the days or months you enter and adds no minimum.
The calculator also shows a loan where the interest is taken each month, or repaid in equal instalments, 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 180 days is £147.95 on a 365-day year, or £150.00 on a 360-day year. That is £0.82 a day, and an effective annual rate of 69.15%. Redeeming after 90 days leaves £73.97 and saves £73.97.
If the same loan took the interest each month, you would pay £25.00 a month.
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 take a pawn loan
Ask how interest is counted for a part month, whether there is a minimum charge or fee, and the total to repay if you redeem early. Compare the effective annual rate with other borrowing.
Inputs for the pawnbroker 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 instalments.
Loan amount
The amount the pawnbroker lends against your item.
Interest rate
The rate on your quote. The rate shown is only an example, so enter your own.
Rate is quoted
Choose per month or per year to match your quote.
Loan period
How long you keep the loan, in the units chosen next. Instalments 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 agreement 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
Pawnbroker loan interest calculator questions
How is pawnbroker interest calculated?
If your quote is 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 agreement counts days.
Do I pay interest for a part month?
That depends on your pawn agreement. The calculator charges the days or months you enter and has no minimum charge.
How long do I have to redeem a pawn in the UK?
Under the Consumer Credit Act 1974 a pawn is redeemable at any time within six months after it was taken. Your agreement may give longer.
Is the effective annual rate the same as the APR on my agreement?
This figure uses only the interest you enter, so it can differ from the APR on your agreement, which your lender works out from the charges in the agreement.