How it works
A pawn loan is a small cash advance secured by an item you physically surrender — jewelry, electronics, tools — repayable with a monthly fee rather than quoted as a rate. The fee structure is what hides the cost: shops commonly charge 10–25% of principal per month depending on state law, so a $150 loan at $30 monthly looks like pocket change while actually carrying a simple annualized rate of 240% and an effective APR above 790% once renewals compound. The calculator converts any quote into the numbers lenders never volunteer: total fees across every renewal you expect to pay, the full amount due to reclaim the item, fees per $100 borrowed, and both the simple and compounded APR for honest comparison against alternatives such as credit-union payday-alternative loans, which federal rules cap near 28%. The schedule table shows the arithmetic month by month, and it explains the industry's own economics: because most pawned items are never redeemed, fees are priced expecting forfeiture. That makes the decision sharper — either redeem early, when fees are still small, or treat the item as sold at a discount rather than rented indefinitely at triple-digit rates.
Formula
Monthly fee = principal × fee% | Simple APR = fee% × 12 | Effective APR = (1 + fee%)^12 − 1 | Redemption = principal + fees × months
Tips
- Convert any monthly fee to an annual number before signing — $30 on $150 is not 'a fee', it is triple-digit credit.
- Redeem as early as possible; fees reset per period, so time is the entire cost.
- Compare a credit-union payday-alternative loan first — capped near 28% APR with no collateral.
- Ask about state caps: several states limit monthly pawn fees dramatically, others barely regulate.
- Unwilling to redeem? Sell the item outright instead — pawn shops typically pay more for purchases than they lend against pledges.
Frequently asked questions
- What is the average interest rate on a pawn shop loan?
- Most shops charge between 10% and 25% of principal per month where state law permits. At the common 20%, a $150 loan pays $30 monthly — a 240% simple annual rate, and higher once renewals compound. State caps vary enormously, so the same ticket can price wildly differently across borders.
- How is pawn loan APR calculated?
- Multiply the monthly fee percentage by twelve for a simple APR — 20% monthly becomes 240%. Because each renewal charges the full principal again, compounding the fee gives the effective figure: (1.20)^12 − 1 equals roughly 792%. The calculator shows both so comparisons stay honest.
- Do you get your money back if you never pick up your pawned item?
- No — forfeiting the item settles the debt entirely. The shop keeps everything it earns reselling it beyond what you owed. Industry disclosures have long shown most pledged items are never reclaimed, which is why fees are set high enough to expect forfeiture.
- Is a pawn loan better than a payday loan?
- Often slightly, because default costs you the item rather than bank penalties and collection calls, and there is no credit reporting. But pricing overlaps heavily — both run triple-digit APRs. A credit-union payday-alternative loan near 28% beats both when membership is available.
- How long do you have to pay back a pawn shop loan?
- Typically thirty days, renewable for additional periods by paying another month's fee — often up to ninety days or six months depending on state rules. Each renewal repeats the fee without touching principal, which is precisely how short loans become expensive ones.