A secured loan is a loan for which you put up security. It can take many forms, but for a pawn transaction, it entails putting up an asset for safe storage until you have paid back the amount borrowed. For a pawn transaction, the collateral is usually a movable asset. For short-term loans against vehicles as security, you use a caravan, car, boat, motorcycle, trailer, or truck as collateral.
Amount that can be borrowed
The amount you can borrow against the vehicle depends on factors, such as the age, mileage, make, and model of the asset. You cannot borrow an amount to the full retail value, as the lender takes the risk of non-payment. To minimise the risk of financial loss because of non-payment, for instance, up to 45% of the asset’s trade value is offered. When you apply for a short-term secured loan against your vehicle from us, you can borrow anything from R5 000 to R250 000 based on the assessed trade value of the asset.
What you need
The asset cannot be encumbered by another loan. This means the vehicle must be paid in full. There cannot be an outstanding amount on the finance. As proof of ownership and that there is no outstanding amount on the asset, you need to have the original registration papers registered in your name. It is possible to borrow money against the asset if it is registered in your business name. Apart from the original registration papers, you will need the company registration papers, identity documents of the directors, and a valid South African driver’s license. If it is registered in your name, you need the original registration papers, your identity document, and a valid South African driver’s license.
What you do not need
Unlike with other short-term means to borrow money, where your income and credit history form the base for how much you can borrow, with a secured loan as provided by us, the asset is the security. Even if you are unemployed or self-employed, you can qualify if you have the required documents and the asset. Your credit standing has no relevance, and you are not asked for what reason you want to borrow the money.
Interest payable
As with all pawn transactions, interest is payable on the amount borrowed. Unlike with unsecured borrowing, the interest is not based on your risk profile as it does not matter. It is standardised and explained in detail before you accept the payment terms. It is a short-term agreement without penalties for early settlement. If you require money for bridging a cash-flow situation or to pay for an emergency expense, and can settle the amount shortly after, you can do so without incurring hefty penalties.
Why you cannot pawn and drive the vehicle
The NCR prohibits pawn and drive transactions. Apart from it being against the law, it also holds risks. For one, the car can be stolen or damaged. It also loses value as the mileage increases and it is subjected to wear and tear. For this reason, the asset is placed in highly secure storage until the loan has been settled.
It is not driven during the period, and it is insured and protected against theft, vandalism, environmental factors, and wear and tear. You receive it back in the exact order as the date we received it.
To find out more on how easy and straightforward it is to get a secured loan against your vehicle for, view our explainer video and complete the online enquiry form.
