$500 idea · Edition 006 · pattern break · Japan · Edition 006
Japan’s 20% lending cap reads 109.5% for anyone holding a ¥22,000 police licence.
質屋営業法第36条 does it by find-and-replace: in 出資法第5条第2項, 「20パーセント」とあるのは、「109.5パーセント（2月29日を含む1年については年109.8パーセントとし、1日当たりについては0.3パーセントとする。）」と [where it says 20 per cent, read 109.5 per cent — 109.8 in a year containing 29 February, and 0.3 per cent per day]. The licence is granted by a prefectural police commission for ¥22,000. In the whole of Japan in 2025, 39 people took it out and 80 gave it up. The 古物 licence from the same counter added 42,170 holders in the same year.
A pawnshop lends you money against an object you leave behind — a watch, a ring, a camera — and if you do not come back and repay within the agreed period, the shop keeps the object instead of chasing you for the debt. Japan licenses this trade separately from every other kind of lending, through the police rather than the financial regulator, and writes special rules for it that are far more generous than the ones ordinary lenders live under. Almost nobody is taking those rules up: the licensed population has shrunk every year for nine years. This edition reads what the licence is actually worth, and why the people entitled to use it mostly do not.
The consensus reading of the Japanese pawn trade is that it is a dying retail business — a shrinking network of dim shops outcompeted by online resale, and the only listed operator, 大黒屋ホールディングス, lost ¥968,055 thousand in the year to 31 March 2025. The accounts say something stranger. Inside that loss, the filing reports 質料（貸付金利息） of ¥841 million and states flatly that 「質料収入は全額が売上総利益になります」 [pawn-interest income is, in its entirety, gross profit]. The loss belongs to the shop bolted onto the book, not to the book. 大黒屋’s segment 「質屋、古物売買業」 turned over ¥9,901 million to produce an operating loss of ¥517 million; the ¥841 million of interest sat inside it, carrying no cost of sales at all.
What the licence actually buys is two carve-outs, not one. The first is the rate. The second is 第18条: 「質屋は、流質期限を経過した時において、その質物の所有権を取得する。」 [on the expiry of the forfeiture period the pawnbroker acquires ownership of the pledge]. Ownership simply moves, with no duty to sell at a fair price and no duty to account for the surplus. For every other pledge in Japanese law that is forbidden — 民法第349条 voids an agreement made before maturity that lets the pledgee take the thing in satisfaction. The pawn statute does not carve an exception out of the Civil Code rule; it writes the opposite rule and leaves the Civil Code standing beside it.
So the non-consensus claim: the scarce thing in this trade is not customers, premises or stock. It is the permission, and it is being handed back. 2,951 permits in 2016, 2,387 at the end of 2025 — down every single year, 19.1% gone, with closures running at 2.05× new grants. In 2025 the police recorded 「質屋に対する行政処分はなかった。」 and 「質屋営業法違反の検挙はなかった。」 — no administrative action and no prosecution in the entire country. A 5.475× statutory exemption from the usury cap, policed in a year with zero enforcement events, is being surrendered at the rate of eighty a year.
There is a reason, and it is the thing the trade does not advertise. On 6 June 2025 the Supreme Court’s Third Petty Bench had oral argument scheduled in four linked cases on whether 利息制限法 — the civil cap of 20%, 18% and 15% by loan size — binds pawn loans at all, 質屋営業法第36条 having disapplied only the criminal statute. Setting down an argument is how that court signals it means to disturb the judgment below. The appellant withdrew before the hearing; no ruling issued; the lower courts’ refusal to apply 利息制限法 became final by default. Two district courts, 大阪地裁 on 27 November 2003 and 名古屋地裁半田支部 on 11 August 2011, had gone the other way. The 109.5% ceiling is real in the criminal law and unsettled in the civil law, and it survived 2025 by withdrawal rather than by judgment.
Which is why the posted prices sit where they do. 質屋かんてい局 会津若松店 publishes a flat schedule by loan size — 8% a month on ¥1,000–50,000, falling to 4% above ¥1,000,000 — on 満月計算, whole months, so one day over a month is charged as two. Eight per cent a month is 96% a year: 87.7% of the licensed headroom, and 4.8× what any other lender in Japan may charge. The headroom is widest at the smallest ticket, which is the only ticket ¥79,230 of capital can write. The listed operator, trading in watches and jewellery at far larger tickets, realised 39.7% on its book.
The one-line contrast with the country this page is not about: in the United States pawn rates are set state by state, so there is no single national number a licence can be said to multiply.
The evidence
8 findingsThe usury cap is rewritten by substitution — 109.5% for 20%
第36条 operates on 出資法第5条第2項: 「20パーセント」とあるのは、「109.5パーセント（2月29日を含む1年については年109.8パーセントとし、1日当たりについては0.3パーセントとする。）」と. It then replaces the fifteen-day minimum in 第5条の4第1項 with 「月の初日から末日までの期間（当該期間の日数は、その月の暦日の数にかかわらず、30日とする。）を一期として利息を計算するものとする。この場合において、貸付けの期間が一期に満たないときは一期とし」 — every month is 30 days and part of a period is a whole period. 第36条第2項 also disapplies 出資法第5条第3項 entirely.
Ownership of the pledge moves by operation of law, with no surplus to return
第1条: 「物品（有価証券を含む。第22条を除き、以下同じ。）を質に取り、流質期限までに当該質物で担保される債権の弁済を受けないときは、当該質物をもつてその弁済に充てる約款を附して、金銭を貸し付ける営業をいう。」 第18条: 「質屋は、流質期限を経過した時において、その質物の所有権を取得する。」 民法第349条 forbids exactly this for every other pledge — a pre-maturity agreement letting the pledgee take the thing in satisfaction is void. The borrower is not personally pursued; the lender keeps whatever the thing is worth.
2,387 licences left, 39 granted, 80 surrendered
許可件数 by year: 2,951 / 2,865 / 2,793 / 2,711 / 2,660 / 2,594 / 2,537 / 2,470 / 2,428 / 2,387. 増減 −41 in 令和７年, negative in all ten. 新規許可数 39 against 廃業・取消数 80. The same document reports 古物商等 permits at 615,194, up 42,170 in the year, and for pawnbrokers 「令和７年中における質屋に対する行政処分はなかった。」 and 「令和７年中における質屋営業法違反の検挙はなかった。」 Unauthorised-goods reports by pawnbrokers: 47, of which 40 were 時計・宝飾品類.
The whole price of the exemption is ¥22,000, and it is not refunded
長野県警察: 「新規許可申請22,000円」, not returned on refusal or withdrawal. 京都府警察 states the same 「22,000円」. The grant is per premises — 営業所ごとに都道府県公安委員会の許可 — and is applied for at the 生活安全課 of the police station covering the premises, not at a financial regulator. Required: 住民票の写し, a municipal 身分証明書 showing the applicant is not an undischarged bankrupt, 誓約書, and a 保管設備の構造概要書.
The interest book is 100% gross margin; the shop around it lost ¥517m
連結売上高 10,232,047千円 (−6.7%), 営業損失 904百万円, 経常損失 1,076,915千円, 当期純損失 968,055千円. Segment 「質屋、古物売買業」: 売上高 9,901百万円, 営業損失 517百万円; 「電機事業」 330百万円 with a 113百万円 profit. Within the pawn segment: 質料（貸付金利息） 841百万円, down 38百万円, and the filing states 「質料収入は全額が売上総利益になります」. 営業貸付金残高 2,118百万円, roughly flat. 24 stores, 187 consolidated employees, 174 of them in the pawn and second-hand segment.
The civil cap question was set down, then withdrawn — no judgment
Four linked cases asking whether 利息制限法 applies to pawn loans were set down for oral argument on 6 June 2025 before the Third Petty Bench, which had asked the trade for typical loan sizes, redemption-versus-forfeiture rates, durations and standard valuation practice. The appellant withdrew the 上告 and the 上告受理申立て beforehand; the hearing did not happen and the lower judgments stood. Two district courts had applied 利息制限法 to pawn loans: 大阪地裁 27 November 2003 and 名古屋地裁半田支部 11 August 2011. Reported by a practising lawyer, not read from a court record.
Posted: 8% a month at the bottom, 4% at the top, whole months only
The operator publishes a flat schedule: ¥1,000–50,000 at 8%, ¥51,000–100,000 at 7%, ¥101,000–500,000 at 6%, ¥501,000–999,000 at 5%, ¥1,000,000 and above at 4%, with the worked example 35,000円 × 8% = 2,800円 for one month. 「ご融資金額が高いほど利息の％は低くなります。」 Counting is 満月計算 — a day past the month is a second month — the 流質期限 is 満3ヶ月, and the page states the ceiling itself: 「出資法は年109.5％までの金利を取得することが認められています。」
The licence costs 14 months of the climb, and the climb is 96 months
Currency: $500 × 158.46 = ¥79,230; $5,000 × 158.46 = ¥792,300 a month. Entry: 22,000 + 900 of certificates + 30,000 of storage equipment = ¥52,900 ($334), leaving ¥26,330 to lend. Rates: 8 × 12 = 96%; 96 ÷ 20 = 4.8×; 96 ÷ 109.5 = 87.7% of headroom; 109.5 ÷ 20 = 5.475×. Book required: 792,300 ÷ 0.08 = ¥9,903,750. Climb from ¥26,330 at 8% a month reinvested: ln(9,903,750 ÷ 26,330) ÷ ln(1.08) = 5.9301 ÷ 0.07696 = 77.1 months; from the full ¥79,230 it is 62.7, so the ¥52,900 of entry cost is 14.3 months. After a 20% effective tax drag the rate is 6.4% and the climb is 95.6 months — 8.0 years — to that gross figure; netting ¥792,300 after Japanese tax needs ¥1,241,166 a month gross, a ¥15,514,580 book and 102.8 months. At the listed operator’s realised rate instead, 841 ÷ 2,118 = 39.7% a year = 3.31% a month, the book needed is ¥23,944,229 and the climb is 260.8 months, 21.7 years. Police base rate: 80 ÷ 39 = 2.05 closures per grant; 2,387 ÷ 2,951 − 1 = −19.1% over nine years; 42,170 ÷ 39 = 1,081× as many new 古物 permits as new pawn permits. First year of interest on ¥26,330: ¥39,973.
The ladder
From $500 to $5,000 a month · ¥79,125 → ¥791,250The statute does not grant pawnbrokers a rate. It takes the number out of the general usury law and writes a different number in its place, which is why the exemption is exactly as wide as the general cap is narrow. If the 20 ever moves, so does the 109.5.
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Read 第36条 as a substitution, not a rate
The statute does not grant pawnbrokers a rate. It takes the number out of the general usury law and writes a different number in its place, which is why the exemption is exactly as wide as the general cap is narrow. If the 20 ever moves, so does the 109.5.
109.5 ÷ 20 = 5.475× the cap everyone else obeys -
Buy the permission, because the permission is the scarce thing
¥22,000 at a police station counter. Not a financial licence, no capital requirement, no bond, no regulator in Tokyo. The constraint on this trade has never been money; it is that only 2,387 entities in Japan may legally price a loan this way.
¥22,000 · 営業所ごと · 都道府県公安委員会 -
Lend small, because the headroom is at the bottom
The ceiling is flat at 109.5 while the posted market rate falls from 8% a month to 4% as the loan grows. The gap over the ordinary cap is 76 points in the smallest band and 28 in the largest — and ¥79,230 of capital cannot write a large loan anyway.
96 − 20 = 76 points · 48 − 20 = 28 points -
Count in whole months, because the statute told you to
第36条 replaces the fifteen-day rule with a thirty-day 一期 and says a period shorter than one is still one. A loan redeemed the same afternoon carries a full month. That is not a shop’s sharp practice; it is the computation method the amendment inserted.
1 day lent = 1 期 = 30 days of interest -
Know that the real return is 第18条, and that nobody publishes it
Interest is the visible half. The other half is that unredeemed pledges become yours outright, at a loan-to-value you set yourself, with no surplus to hand back. The Supreme Court asked the trade for its forfeiture rate in 2025. It is still not public, and it decides this entire business.
流質期限 passes → ownership moves · surplus retained -
Do not take the shop with the book
The only listed operator reports its interest income as entirely gross profit and still lost ¥517 million in the segment that contains it. Twenty-four stores and 174 people are what turned a 100%-margin lending book into a loss. The book is the business; the shopfront is the overhead.
¥841m at 100% margin · segment −¥517m -
Price the unsettled law before you price the loan
第36条 disapplied the criminal statute and said nothing about 利息制限法. Two district courts have held the civil cap applies. The Supreme Court set the question down for 6 June 2025 and the appellant walked away. Anything priced above 20% is a position on an open question.
20 / 18 / 15% civil · 109.5% criminal · unresolved -
Accept what the arithmetic says: this is a licence, not a ladder
¥26,330 of lendable capital at the best posted rate in Japan, every yen of return reinvested, after an ordinary tax drag, reaches ¥792,300 a month of gross interest in ninety-six months, and the same sum net of Japanese tax in 103. The exemption is extraordinary. The compounding base is not, and no rate fixes a base that small.
¥26,330 → ¥9,903,750 at 6.4%/mo = 95.6 months
Sources
13 primary documents- 質屋営業法（昭和25年法律第158号）第1条・第18条・第36条 — read 6 November 2026
- 質屋営業法 制定法律 — 衆議院 — read 6 November 2026
- 警察庁生活安全局『令和７年中における古物営業・質屋営業の概況』 — read 6 November 2026
- 警察庁 事業統計（探偵業、古物営業・質屋営業、警備業） — read 6 November 2026
- 長野県警察 質屋営業許可申請の手続（手数料22,000円） — read 6 November 2026
- 京都府警察 質屋営業（手数料22,000円） — read 6 November 2026
- 大黒屋ホールディングス株式会社 有価証券報告書 第116期（EDINET S100W8RX） — read 6 November 2026
- 大黒屋ホールディングス株式会社 有価証券届出書 2025年10月31日（EDINET S100WY4U） — read 6 November 2026
- 国税庁 No.2260 所得税の税率（令和８年４月１日現在法令等） — read 6 November 2026
- 兵庫県 個人事業税（第1種事業5%・金銭貸付業・事業主控除290万円） — read 6 November 2026
- 質屋かんてい局 会津若松店『質の利息について簡単にご説明いたします。』（live listing） — read 6 November 2026
- 中谷雅昭弁護士「質屋営業として行われる金銭の貸付けについて利息制限法所定の制限利率の適用があるか？（幻の最高裁判決について）」（secondary） — read 6 November 2026
- USD/JPY 158.46 — ECB reference rate 5 Nov 2026 via Frankfurter — read 6 November 2026
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