Pawn Loan Profit Calculator: Loan-to-Value and Redemption Rate

1. Your typical loan

Typical loan ($)

Average amount you lend per ticket.

Loan as % of resale price

Loan divided by what you expect to resell the item for. 35% means you lend $35 on a $100 item.

Loans redeemed (%)

Share the customer pays off and takes back. Use your own last-12-months figure.

New loans a month

Used for the monthly profit and money out.

2. What you charge

Interest and service charge per month (%)

Check your state's cap; the example is a placeholder.

Flat fee per ticket per month ($)

Storage or insurance fee, if you charge one.

Months a redeemed loan stays open

Average, counting renewals.

Months until a forfeited item is yours

Loan term plus any grace period.

Months of interest paid on loans that forfeit

Renewals the customer paid before walking away.

3. When the item is forfeited

Sale price as % of your retail estimate

After markdowns and haggling. Check what last quarter's forfeits actually sold for.

Selling cost (%)

Marketplace fees, card fees, commissions.

Shrink on forfeited items (%)

Lost, damaged, returned or written off.

Days a forfeited item takes to sell

4. Your costs and your target

Cost to write a loan ($)

Labour, paperwork, police-reporting entry.

Storage and handling per item per month ($)

Cost of your money (% a year)

What the cash would earn elsewhere or what you pay to borrow.

Profit you want on each dollar lent (%)

Used for the largest-loan figure.

Item on the counter: your retail estimate ($)

The tool shows the biggest loan that still meets your target.

Result

Questions pawnbrokers ask

How much should a pawn shop lend on an item?

Work back from what a forfeit really nets you. The largest loan is the one where the interest you collect, plus the gain on the forfeited items weighted by how often loans forfeit, less per-ticket cost and the cost of money, still leaves your target profit. This tool solves that for the item on your counter and shows it as a share of resale price.

What redemption rate does a pawn shop need to break even?

It depends on how much you lend against resale value. At a low loan-to-value, forfeits are profitable and you can survive a low redemption rate; at a high one you need most loans redeemed. The tool finds the break-even redemption rate for your figures and shows profit at redemption rates from 50% to 90%.

What is a good loan-to-value for pawn loans?

There is no single number. Many shops lend a third to a half of expected resale, but the right figure depends on your rate, how often loans forfeit, what forfeits sell for and your costs. The loan-to-value table shows profit per loan across a range so you can see where the margin turns.

Why do small loans lose money?

Every ticket costs about the same to write, store and report whether it is $20 or $200. The tool computes the smallest loan that pays at your loan-to-value, below which per-ticket cost outruns the interest and the resale gain.

Is this financial or legal advice?

No. It is arithmetic on figures you type. Pawn charges, licences, holding periods and reporting rules are set by state and local law; check yours with a qualified professional.

Not decided

Whether a loan is legal at your rate (state and local caps, licences, holding periods and reporting rules differ), item authenticity and condition, how the market will price a forfeit, taxes, and seasonal swings in redemption. Every loan is treated as the same typical loan with the same redemption chance; real tickets vary. Interest is simple, not compounded.