How Ohio Pawnbrokers Use PPSS
Interest Calculation on Unpaid Principal
Ohio law requires interest to be calculated on the unpaid principal balance on the first day of each month. Interest is never compounded. PPSS tracks:
- Original principal amount
- Current unpaid principal balance
- Principal reduction payments
- Monthly interest due (5% of unpaid principal on 1st of month)
Example: $1,000 Loan with Partial Principal Payment
Month 1: Principal $1,000, Interest $50, Storage $4
Customer pays $300 total ($50 interest + $4 storage + $246 principal reduction)
Month 2: Principal now $754 ($1,000 - $246)
Interest: $754 × 5% = $37.70
Storage: $4
Total due: $41.70
PPSS automatically recalculates interest based on the reduced principal balance each month.
$4 Flat Storage Fee
Ohio law allows pawnbrokers to charge "no more than" $4 per month for all pledged articles held as security or stored for a loan. This fee must be agreed to in writing at loan origination.
PPSS tracks:
- Whether $4 storage fee was agreed to (yes/no)
- Monthly storage charges accumulated
- Storage payments received
The $4 fee is per loan account, not per item. If a customer pledges multiple items as security for one loan, the storage fee is still $4 monthly total.
No Prepayment Rule
ORC §4727.06(D) states: "A pledgor may not prepay interest or storage charges, except when the pledgor redeems the pledged property."
This means:
- Customers can pay principal anytime (reducing future interest)
- Customers can redeem anytime after 72 hours (paying all interest/storage due)
- Customers CANNOT pay interest or storage ahead for future months
PPSS prevents prepayment of interest or storage. The software only allows these charges to be paid when they're due or at redemption.
3-Month Default + 30-Day Notice Forfeiture Process
Ohio has a two-stage forfeiture process (ORC §4727.11):
Stage 1: 3-Month Default Period
If pledgor fails to pay interest and fees for 3 months from the loan date or last interest payment, the account enters default status.
Stage 2: 30-Day Forfeiture Notice
Pawnbroker must notify pledgor by U.S. mail (with proof of mailing) that unless they redeem or pay all interest and fees within 30 days, property will be forfeited.
Timeline Example:
- January 1: Loan made
- February 1: Month 1 interest due ($25 + $4 = $29) - not paid
- March 1: Month 2 interest due ($25 + $4 = $29) - not paid
- April 1: Month 3 interest due ($25 + $4 = $29) - not paid (3 months in default)
- April 5: Pawnbroker mails 30-day forfeiture notice
- May 6: 30 days expired, property forfeits to pawnbroker (if not redeemed)
PPSS tracks default dates, calculates 3-month default periods, flags accounts requiring forfeiture notices, and generates notice letters with customer addresses.
15-Day Hold on Purchased Property
Ohio requires pawnbrokers to retain purchased goods for 15 days before selling them (ORC §4727.12). This allows law enforcement time to check for stolen property. Pawnbrokers may dispose of purchased goods sooner with written permission from the chief of police or county sheriff.
PPSS tracks:
- Purchase dates
- 15-day hold expiration dates
- Items eligible for sale vs. items still in hold period
- Law enforcement permission to sell early (if obtained)
Additional Authorized Fees
Ohio allows a few additional fees beyond the 5% interest and $4 storage:
- $4 shipping fee (plus actual shipping cost) when pawnbroker delivers or forwards pledged article to pledgor
- $2 lost ticket fee upon redemption if pledgor lost original pawn statement
- $2 forfeiture notice fee when mailing the 30-day forfeiture warning
These fees must be recorded separately on the pawnbroker's copy of the pawn statement so they're separately identifiable. PPSS tracks these additional fees as separate line items.
