Pawn 101: How Pawn Loan Interest & Repayment Works: A Quick Guide
So you’ve done it! You’ve completed your first pawn loan! The money you agreed upon will help you immensely, and you won’t have to worry about your loan for 86 days!
Now that you have the pawn loan, what does it all mean? If you want to repay it, renew it or let the pawned item go, there are options available to you with your pawn loan.
Some Simple Repayment Math
The first week of your loan is calculated as a one week flat fee, this is done mostly to cover costs and keeps the transaction fair. Then after the first 7 days, the service charge is calculated daily. Of course we don’t expect to have you sit down with the ol’ adding machine daily and figure it all out, so if you are curious as to what your pawn loan will be on any given day, you can call us and we will be happy to assist you.
But let’s say you wanted to figure it out. The duration of your pawn loan is 86 days based on the first day your pawn loan is signed. The service charge is calculated 8 weeks from that day. After the 8 weeks has expired, Parlour Pawn has a 30 day grace period at no additional charge! Your pawn loan service charge will not increase while it is in it’s grace period.
Addressing the Loan and Looking at Renewal
When you decide to address your pawn loan, you have two options – renew or redeem. Renewing your pawn is simply just paying the current service charge. This starts the pawn over. It is a great option for people who don’t have enough to redeem their pawn loan, but need a little extra time. Renewing starts the pawn loan over, and gives you up to another 86 days! Service charges on the pawn loan are reduced to zero and start calculating over again based on how long the pawn is active.
Renewing also comes with another option. You can pay more than the current service charge and reduce the principle. For example, if your current service charges are $30, and you want to pay $40, then the extra $10 will reduce the initial amount you were loaned. This enables you to pay a pawn loan down faster so that you won’t have to pay as much to renew or redeem later.
Redeeming your Pawn
This brings us to redeeming your pawn. Redeeming basically means you’ve paid your loan back and it’s time to get your stuff back. This is a pretty straight forward process. Your loan is based on the amount of your pawn loan and the number of days since the loan was signed. The service charge is in addition to the loan amount. When you pay the full amount, sign your copy of the receipt, then your product is returned to you and you can be on your way to another great day!
Hopefully this helped make the world of pawn loans a little more clear. If you have any questions or comment please don’t hesitate to ask them below in the comments or on our facebook page. Until next time.