Costs of Borrowing from A Pawnbroker

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A short-term solution to you cash flow needs

Pawnbroking is significantly different from most other sectors in that it represents a secured loan market with relatively low average loan values. This adds to the financial alternatives within the loan marketplace and gives enhanced customer choice.

The Financial Ombudsman Service receives very few complaints related to pawnbroking, which is an indication that the companies providing this service do so because it suits their clients needs and it also strongly supports the fact that the business transaction is conducted with the upmost integrity.  FOS reported that in the year 2015/16 there was only 47 complaint cases which involved pawnbroking, of which 15 (31%) were upheld.  

In an effort to give a comparison of the cost of credit across various products a mechanism was put in place where the annual percentage rate (APR) had to be quoted. The APR calculation is misunderstood by many , whether politicians or members of the public. Fundamentally, a useful rule of thumb is ‘the shorter the term, the higher the APR’. An interesting point to raise is that, if banks were required to quote APRs on their unauthorised overdrafts, they would be significantly higher than pawnbroking APRs and well above the “high cost short term credit” (HCSTC)loan cap.

In reality, the experience of pawnbrokers shows that what concerns customers most is the actual money cost, for example – ‘if I borrow £100 for a month, what will I have to pay back in money terms?’

The table below shows that bank overdrafts with various providers compared against a pawnbroking loan.

Banks – £100 unauthorised loan paid back after 28 days compared to pawnbroking:

PAWNBROKER *£6.75 to £10
TSB £80
HSBC £80
Lloyds £80
RBS £90

Source: ‘Which’ Jul 16 and *NPA

The figure that is shown for the pawnbroker, in the example above, ranges between £6.75-£10, at Hopkins and Jones a pawnbroking store that is located in central London, the rates are a lower still with their rates tapering downward as the amount you borrow increases.

Loan amount Monthly Rate (Simple) % APR
0-£999.99 6% 84.96%
£1,000- £9,999.99 5% 69%
£10,000 and above 4% 53.76%


With the majority of the loans in this London pawnbrokers being in the £1,000 -£9,999.99 bracket the table below shows the cost of borrowing of a £5000 loan which is redeemed at various points during the contract run, which is anytime up to including 6 months.

Loan Amount Period(Months) Total Amount Payable Monthly Rate
£,5000.00 1 £5,250.00 5%  (APR 69%)
£,5000.00 2 £5,500.00 5%  (APR 69%)
£,5000.00 3 £5,750.00 5%  (APR 69%)
£,5000.00 4 £6,000.00 5%  (APR 69%)
£,5000.00 5 £6,250.00 5%  (APR 69%)
£,5000.00 6 £6,500.00 5%  (APR 69%)

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On March 2, 2017

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Hopkins & Jones Ltd is a trade member of The NPA (The National Pawnbrokers Association). Hopkins and Jones Limited, Company registration Number 433606. Registered Office, 7 William IV Street, London, WC2N 4DW. Hopkins and Jones Limited are authorised and regulated by the Financial Conduct Authority licence No 6520002 for the provision of pawnbroking loans.
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