Loan-to-value on a pawn loan
A pawnbroker lends a share of what your item is worth, and that share is the loan-to-value. A £500 loan against gold worth £1,200 is an LTV of about 42%. The lower it is, the larger the gap between the loan and the value of the gold you leave as security.
There is no single figure that every pawnbroker uses, so you enter the limit from your offer. Some pawnbrokers also work out the amount due at redemption, including interest, against the value, so you can choose to measure the LTV on the loan plus interest.
The value comes from the gold's net weight, its carat and the price per gram. Enter the weight of stones separately, since they are not valued as gold. A pawnbroker uses its own price, so treat the result as a guide.
Worked example
A 20 g 18 carat chain, with gold at £80 a gram for 24 carat, is worth £1,200.00. A loan of £500 against it is an LTV of 41.67%. With a 50% limit the most the gold supports is £600.00, leaving £100.00 of room, and the gold price could fall by 16.67% before you reached the limit.
Interest changes the picture. At 5% a month, simple, over 6 months (60% a year), the amount due is £650.00. Measured on that, the LTV is 54.17%, which is £38.46 over a 50% limit.
To estimate the most a pawnbroker might lend, use the pawnbroker gold loan amount calculator.
Before you pawn your gold
Ask the pawnbroker for the loan, the amount to redeem, the date by which you must redeem and what happens to your gold if you do not. A pawn under the Consumer Credit Act 1974 is redeemable at any time within six months after it was taken (section 116(1)); your agreement sets the actual terms.
To see what you would repay, use the pawnbroker bullet loan calculator.
Inputs for the pawnbroker loan to value calculator
Weight of your gold items
The total weight in grams, including any stones. A troy ounce is 31.1035 g.
Weight of stones and other non-gold parts
Stones and fittings are not valued as gold. Enter 0 if there are none.
Purity (carat)
The hallmark carat on the item. 9 and 18 carat are common for UK jewellery.
Gold price is quoted for
Choose 24 or 22 carat to match your price, and the calculator converts it.
Gold price per gram
Today's price per gram for that purity. The price shown is only an example.
Amount lent
The loan you have been offered against the gold.
Lender's loan-to-value limit
The most the pawnbroker lends as a share of the value. Use the figure in your offer.
Loan-to-value is measured on
Choose the loan alone, or the loan plus interest due at the end.
Interest rate (a year)
Pawn rates are often monthly, so multiply by 12. It is only used when interest is counted.
Term
The months until you redeem. It is only used when interest is counted.
CALCULATOR QUESTIONS
Pawnbroker loan to value calculator questions
What loan-to-value do pawnbrokers use?
It varies by pawnbroker and item. Ask for the share in your offer and enter it here.
What happens if the gold price falls after I pawn my gold?
Your item is worth less than when you pawned it. Check your agreement for what the pawnbroker may do and when.
Is interest included in the loan-to-value?
That depends on the pawnbroker. You can measure it on the loan alone or on the loan plus interest due.
How long do I have to redeem my gold?
A pawn is redeemable at any time within six months after it was taken under the Consumer Credit Act 1974. Check your agreement.