Pawn Shop Interest Rates Explained: What You'll Actually Pay

How Pawn Shop Interest Works

Pawn loan interest is simple interest, not compound. You're charged a flat percentage of the original loan amount (the principal) per month. If you borrow $200 at 10% monthly, you owe $20 per month in interest — whether it's month one or month six. The interest does not grow on itself.

Most pawn loans have a 30-day term. At the end of 30 days, you have three options:

1. Redeem: Pay the full principal + interest and get your item back.
2. Extend (rollover): Pay only the interest to reset the loan for another 30-day term. Your principal stays the same.
3. Forfeit: Walk away. The shop keeps your item. No credit impact, no collections, no further obligation.

For a deeper overview of the full pawn loan process, see how pawn shops work.

Pawn Shop Interest Rates by State

Every state sets its own maximum interest rate for pawn loans. Some states also allow additional fees (storage, insurance, setup) on top of interest. Here are the rates for notable states — organized from lowest to highest:

Sources: Broffs Diamond Loan, Texas OCCC, Florida DACS, Massachusetts DOB. Rates may change; verify with your state's regulatory authority.

For a comprehensive guide to all state pawn regulations — including hold periods, licensing, and consumer protections — see our pawn shop laws by state guide.

The Real Cost: What Extensions Actually Cost You

The monthly rate looks manageable. But most people don't redeem in the first month — they extend. Here's what a $300 pawn loan actually costs over time in three different states:

After 6 months in Florida, you'd pay $750 total to recover a $300 loan — that's $450 in interest, or 150% of the original loan amount. In California, the same timeline costs just $45 in interest. This is why knowing your state's rate matters.

Additional Fees Beyond Interest

Several states allow pawn shops to charge fees on top of the monthly interest rate:

• Storage fees: Charged for holding your item. Oregon allows 7% of loan amount per month.
• Setup/origination fees: A one-time fee when the loan is created. Oregon allows 10% of loan amount.
• Insurance fees: Some states allow shops to charge for insuring your item while held.
• Lost ticket fees: If you lose your pawn ticket, there may be a replacement fee and additional ID verification.

Every fee must be disclosed in writing on the pawn ticket. Read the ticket before signing. If a fee isn't listed, you don't owe it.

How to Minimize Your Pawn Loan Costs

1. Redeem as fast as possible. Every extra month costs another round of interest. If you can repay in 15 days instead of 30, do it — you still pay the full month's interest, but you avoid a second month entirely.
2. Borrow only what you need. Interest is a percentage of principal. A $200 loan at 10% costs $20/month; a $150 loan costs $15. The shop will often lend less if you ask — a lower loan means lower interest.
3. Compare shops. In states with high rate caps, not every shop charges the maximum. Use Pawn Spots to find shops in your area and call to ask about rates before visiting.
4. Consider selling instead. If the interest cost over your expected repayment timeline exceeds the difference between the pawn offer and sell offer, selling is the better deal.
5. Never extend more than once. By the second extension, you've often paid more in cumulative interest than the difference between the pawn and sell offers. At that point, you're losing money holding the loan open.

Pawn Loans vs. Other Short-Term Borrowing

How do pawn loan costs compare to alternatives? Here's a realistic comparison for a $300 loan over 30 days:

Pawn loans are more expensive than bank loans or credit cards — but they require no credit check and have zero credit risk. If you have poor credit or no credit history, a pawn loan may be your most accessible option. For a deeper comparison, see our guide to collateral loans explained.

Frequently Asked Questions