David is a Chartered Financial Analyst with 15 years of experience in consumer lending and alternative financing.
This 4-in-1 Pawn Shop Loan calculator reveals the true cost of this loan type. Enter any three variables—Loan Amount, Finance Charge, Loan Term (in days), or Annual Rate (APR)—to solve for the fourth.
Pawn Shop Loan Calculator
Pawn Shop Loan Formulas (APR)
R = (F / P) * (365 / T) * 100
Solve for Finance Charge (F):
F = P * (R / 100) * (T / 365)
Solve for Loan Amount (P):
P = F / ((R / 100) * (T / 365))
Solve for Loan Term (T):
T = (F / P) / (R / 100) * 365
Formula Variables
- (P) Loan Amount: The amount of cash you receive for your item (collateral).
- (F) Finance Charge: The total fee (including interest and storage) you must pay to get your item back.
- (T) Loan Term (Days): The length of the loan, typically 30, 60, or 90 days.
- (R) Annual Rate (APR): The Annual Percentage Rate, which represents the true annual cost of the loan.
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What is a Pawn Shop Loan?
A pawn shop loan is a short-term, high-cost loan where you use a valuable personal item (like jewelry, electronics, or a musical instrument) as collateral. You bring your item to a pawnbroker, who assesses its value and offers you a loan for a fraction of that amount. You leave the item at the shop and receive cash.
To get your item back, you must repay the original loan amount plus a finance charge, which includes interest and other fees (like storage). These loans are typically for short terms, such as 30 to 90 days. If you fail to repay the loan by the due date, the pawn shop keeps your item and has the right to sell it.
Like payday and title loans, pawn shop loans have very high interest rates. A monthly interest rate of 20% is not uncommon, which translates to an APR of 240%. This calculator helps you see the true APR of a pawn loan so you can understand its cost.
How to Calculate a Pawn Loan APR (Example)
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Identify Your Loan Details
You pawn a laptop and receive $200 (P). The pawn ticket says you must pay back $240 in 30 days (T). This means the finance charge is $40 (F). You want to find the APR (R).
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Find the Cost per Day
First, find the fee as a percentage of the loan: ($40 / $200) = 0.20, or 20% for 30 days.
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Calculate the Annualized Rate
To find the APR, we see how many 30-day periods are in a year (365 / 30 = 12.167) and multiply that by the 30-day rate.
Formula: R = (F / P) * (365 / T) * 100 -
Apply the Formula
R = ($40 / $200) * (365 / 30) * 100
R = 0.20 * 12.1667 * 100
R = 2.4333 * 100
R = 243.33% -
Final Result
A $40 fee on a $200, 30-day pawn loan is equivalent to a 243.33% APR.
Frequently Asked Questions (FAQ)
If you fail to repay the loan (plus fees) by the due date, the pawn shop takes ownership of your collateral (the item you pawned) and will sell it. The primary benefit is that this does not affect your credit score, as it is not reported to credit bureaus.
How much can I borrow from a pawn shop?This depends entirely on the resale value of the item you bring in. The pawnbroker will offer you a percentage of what they believe they can sell the item for, which is much lower than its original retail price. Loan amounts are typically small.
Is a pawn loan better than a payday loan?Both are very high-cost loans and should be avoided if possible. However, a pawn loan is often considered less risky than a payday or title loan. With a pawn loan, the worst-case scenario is you lose your item. With payday or title loans, you risk a cycle of debt, wage garnishment, or the loss of an essential asset like your car.
How do I find the Finance Charge from an APR?You can use this calculator. Enter the Loan Amount (P) you want, the APR (R) the shop advertises (if they do), and the Loan Term (T) in days. Leave the “Finance Charge (F)” field blank and click “Calculate.” The result will show you the exact fee in dollars.