How Pawnshops Work

Interest Rate

­­What about the interest rate? In North Carolina, the maximum interest rate that a pawnshop can charge is 2 percent per month, or 24 percent per year. That's about the same as some credit cards. However, a pawnshop can also tack on other charges, such as handling, appraisal, storage and insurance fees. The maximum allowed charge for these additional fees is 20 percent per month. In addition to the 20-percent cap (which does not include the 2-percent interest cap), there are the following total (interest plus fees) limits:

  • First month - $100.00
  • Second month - $75.00
  • Third month - $75.00
  • Fourth to six months - $50.00

­­In practical terms, this means that the maximum loan that someone can get at a North Carolina pawnshop is about $500. Even with this regulated fee structure, the interest rate still works out to well over 100 percent annually. In North Carolina, you have to pick up the collateral and make a new loan on it after six months, or else the collateral becomes the property of the pawnshop (and the pawnshop can sell it).