How a pawnbroker loan is repaid
You leave an item, often gold jewellery or a watch, with a pawnbroker and receive a loan against it. You pay nothing during the loan. To get the item back you repay the loan plus the interest and any charges in one payment.
A pawn taken under the Consumer Credit Act 1974 is redeemable at any time within six months after it was taken (section 116(1)). If the item is sold after the redemption period, section 121 says any surplus from the sale is paid to the pawnor, and a shortfall becomes the amount still owed. Your pawn agreement sets out your actual terms.
Pawnbrokers often quote a monthly rate rather than a yearly one. The calculator lets you enter either. It works interest out as simple interest by default, and can add unpaid interest to the loan each month if your agreement does that. It does not apply any minimum charge or fee, so add those separately if your pawnbroker has them.
Worked example
Borrowing £200 for 6 months at 5% a month on simple interest costs £60.00 in interest and charges, so you repay £260.00 to redeem the item. As a simple yearly rate that is 60.00%, and the effective annual rate is 69.00%.
The same loan quoted as 125.9% a year over 6 months costs £125.90 and you repay £325.90, an effective annual rate of 165.53%. A short loan at a high rate can look small in pounds but expensive as a yearly rate, so compare both.
If your agreement added unpaid interest to the loan each month, the first example would cost £268.02 to redeem. An item worth £600 with a 50% limit would allow a loan of up to £230.77 once the interest due is counted.
To estimate what a pawnbroker might lend on gold, use the pawnbroker gold loan amount calculator.
Before you take a pawn loan
Ask for the redemption date, the total to repay if you redeem early, any minimum charge, and what happens to the item if you do not redeem it. Compare the effective annual rate with other borrowing, such as a personal loan, because a pawn loan is short but its rate is usually high.
The pawnbroker loan vs personal loan calculator compares the cost side by side.
Inputs for the pawnbroker bullet loan calculator
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. Pawnbrokers often quote monthly.
Term
The months until you redeem the item and pay, from 1 to 60.
Interest is worked out
Simple interest is rate times time. Compounded monthly adds unpaid interest to the loan each month.
Value of your item
What the pawnbroker values the item at, as resale or scrap value.
Lender's loan-to-value limit
The most the pawnbroker lends as a share of that value. Use the figure on your quote.
CALCULATOR QUESTIONS
Pawnbroker bullet loan calculator questions
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.
What happens if I do not redeem my item?
After the redemption period the pawnbroker can sell it. Any surplus goes to you, and a shortfall is the amount you still owe (Consumer Credit Act 1974, section 121).
Is the effective annual rate the same as the APR on my agreement?
Not always. This figure uses the interest you enter. A lender's APR also counts fees, so it can be higher.
Does this include a minimum charge?
No. If your pawnbroker has a minimum charge or fee, add it to the loan's interest and charges yourself.