Taking out a loan against your vehicle has become a quick and easy solution to secure cash. Many people have thought about taking out collateral (based on a car) loans, but their adverse credit history, unfortunately, counts against them. Despite their negative credit history, it has become easier than ever to secure funding; we’ll explore the most common questions and how you can take a loan out against your vehicle.
What are the benefits of taking a loan against my car?
- For starters, it is possible to take the loan and swiftly repay the amount, with no need for extended term contracts with crippling interest.
- If you are currently unemployed, there are very few avenues to get a loan. Taking a loan against your car is easy if you need to access cash when your month is simply too long for your bank account.
- You don’t want to deal with the added stress of loan sharks or unscrupulous pawn shops, often unregulated.
- It’s a great source of capital for business owners who are waiting to be paid.
Are you deciding on a credible solution for a loan against my car?
Remember, not all loan providers in South Africa are credible! We’ve heard horror stories of clients who’ve been taken for a ride (literally), where their cars were used or even after having paid back the loan, the “loan provider” did not want to return the vehicle. That’s why it’s so vital that you register with an accredited loan provider. At Xcelsior, we are a privately owned and registered credit provider operating in South Africa, and you can always trust us to offer a professional and ethical service and approach.
Why Pawn Your Car for Cash in South Africa as Opposed to Selling It?
High living costs resulting from an increase in fuel prices, electricity tariffs, school fees, and food can take a toll on your finances. A poor credit record because of a past default for a loan can severely hinder your ability to qualify for a bank loan, overdraft facility, or even a short-term loan. The solution is to pawn your car for cash, otherwise known as taking a collateral loan against your car.
Why Not Sell It?
The chances are that financial problems are short-term. Selling a valuable vehicle at a price far below its true value to cover a debt or perhaps use the money for a business opportunity leaves you without an asset. You have paid off the vehicle finance and enjoy having the vehicle. Selling it means losing it forever. However, if you pawn your car for cash, you can have the money within 30 minutes of completing the application. You still own the vehicle. It is merely placed in storage until you have paid off the loan. The interest is affordable, and the amount you can borrow depends on the vehicle’s value. With a typical short-term loan, you must have a good credit standing, proof of income, and proof of address. You can only qualify for an amount directly related to your income. When you pawn your car for cash, you do not need any of the above. The amount is not limited to your monthly income or affordability profile. You also do not have to explain why you need the money.
Why Would You Want to Pawn Your Car for Cash?
Maybe you want to start a business but cannot qualify for a business loan. Or perhaps you want to enrol in a safety officer course. It is expensive, and since it is a short course, getting a student loan is difficult. To this end, you do not want to sell your vehicle. Instead, you just need to access funds to achieve your study or business goals. With our loan model, you are not penalised for paying off the loan quickly. There is no need to sell assets to achieve your dreams.
To illustrate how easy it is, we’ll use a case study from a loan applicant.
Meet Thabo; Thabo is 42 years old and owns a chicken farming business in Mpumalanga. He is waiting to be paid for his livestock yet needs cash to tie him over. Thabo is self-employed and has a poor credit history from his younger years. Traditional banks and lending institutions don’t see that Thabo currently makes R800,000 per year or that he owns 2 cars. All they see is his failure to pay back a clothing account from when he was 30. Thabo currently has a second vehicle that he uses on the farm, which is going to be used as collateral.
With Xcelsior, it’s so easy to secure a loan. All Thabo has to do is visit the office in Witbank, call or apply online for a loan.
Thabo chooses to SMS “Quick Cash” to 41235. A consultant calls him back to explain how the application works and answer any questions.
The consultant can quickly assess the value of the vehicle and determines that Thabo can borrow R100,000. Regardless of whether Thabo earns R800,000 or R0 per year, the vehicle’s value is the only thing of interest to Xcelsior and bringing a stress-free loan experience, of course.
Thabo agrees to R100,000 in exchange for the vehicle. He then drives the vehicle to Witbank. The car is processed and sent to a secure storage facility. The payment is made straight away, and as Thabo uses the same bank account as the Witbank branch, he receives his money within 30 minutes.
30 days later, Thabo pays back the R100,000 with interest and gets his farm vehicle back.
The process is quick, easy, lengthy paperwork free and ultimately better for Thabo and you.
Here is what you need to know to qualify:
- You must be a South Africa citizen.
- The vehicle must be paid off in full and registered in your name. You cannot pawn a vehicle that is in a family member’s name.
- The vehicle must be assessed prior to the loan being approved so that a loan amount can be agreed upon. The maximum loan amount possible is not more than 50% of the assessed value. This is something to consider, as you should only ever borrow the loan amount that you actually need in order to avoid getting into unnecessary debt.
- There is no need to prove employment, provide bank statements, pass an affordability check, or have a credit or background check carried out. While this makes the loan process a great deal simpler for you, it is always advised that you make sure that you can afford the loan’s monthly repayments before going ahead.
- If you default on your loan repayments, our policy is to sell the vehicle to cover the cost of the loan. However, if the vehicle is sold for more than the outstanding loan amount, the balance will be paid over into your account. We always put our clients first.
Xcelsior’s loan model
Xcelsior provides loans against vehicles when provided as security. These loans can range from R5000 up to R250,000. Of course, this depends on the value of the car offered as collateral. We accept various forms of collateral, including cars, bakkies, trucks, motorbikes, caravans, speedboats, jetskis and SUVs.
Our business model is different. We don’t conduct affordability checks, and background checks like standard banking institutions often do. This allows more people access to loan facilities. Our radical approach means we can have an answer within an hour! We will always do our best to ensure your loan is approved and eliminate all unnecessary forms of paperwork. Xcelsior makes it a smooth process, from the start until finish.
Some points to note:
- Pawning assets to get loans is allowed under the National Credit Act (NCA), which is both legal and regulated by law. You will need to bring in your Id, drivers licence and original RC1 of your vehicle.
- You will need the vehicle’s registration papers.
- Once your loan is approved, the funds will be transferred into your bank on the same day.
- You can choose whether to repay your loan in full or monthly instalments with interest.
- If you cannot repay your loan, we may be able to extend your contract, if this is still not possible, your vehicle/collateral will be sold and any surplus paid back to you.
- Your vehicle will never be ridden.
- Our storage facility, where your car will be kept, is under 24-hour constant surveillance.
If you’re like Thabo and struggle to access credit despite owning a collateral asset, get in touch and see how Xcelsior can assist you in applying for a loan.