If you need same-day access to capital, consider these dos and don’ts of pawning your own vehicle at a car pawn shop.

Pawning a fully-paid vehicle is a quick way to raise funds. But, as with all types of financing, there are questions around costs, timing, qualifying criteria and the pawn process itself.

Dos of pawning your vehicle

1. Know how the pawn-a-car process works

In order to release the equity in your car, you must hand it over as collateral.

The funds you can borrow are dependent upon the assessed value of the car.

Once the capital has been re-paid according to the contractual terms, the vehicle is returned to you.

If you’re not prepared to be without your car, this type of loan arrangement is not for you.

2. Have documents to support your application

Car pawn shops only process applications supported by key documents. The vehicle’s original registration papers, a copy of your ID and proof of residence are requested as a matter of course.

In some cases, you may have to demonstrate you have the income to repay the monthly loan instalments.

At Pawn My Car, we don’t conduct affordability assessments or credit checks. Neither do we request bank statements or proof of income.

3. Find a reputable finance provider

In recent years, the number of car pawn shops and micro-lenders in South Africa has mushroomed.

Many of these “loan providers” offer dodgy deals characterised by hidden fees and sky-high interest rates.

To avoid being scammed, use an accredited company that has a physical presence, not just online. That way, you’re assured of NCR-compliant interest rates and transparent loan agreements.

Pawn My Car is a division of a reputable finance provider, registered with the National Credit Regulator (NCR) and Financial Services Board (FSB).

We have a network of physical branches located in South Africa’s major cities.

4. Read the small print

Before you sign a pawn-a-car agreement, make sure you read and understand the terms. If you’re unsure about anything, ask for clarification.

Factors like loan extensions, early-settlement penalties, initiation and admin fees, and interest rates should be covered in the agreement.

If these factors aren’t included, take your business elsewhere.

Don’ts of pawning your vehicle

1. Don’t forget to clean the car

The amount you get for pawning your car is determined by its make, model, mileage and condition.

A clean, freshly polished and well-maintained vehicle with a good service record will raise more at the pawn shop and on the pre-owned vehicle market.

2. Avoid pawn-and-drive schemes

Pawn-and-drive schemes may seem like an ideal solution but they’re fraught with danger.

This type of lender typically expects the vehicle’s ownership to be signed over. Some even charge a monthly rental for allowing you to drive your own car.

That extra cost is over and above the loan initiation fees, monthly admin fees and higher-than-usual interest rates. What’s more, you may be expected to buy your car back at the end of the loan term.

Based on warnings from the National Credit Regulator, these schemes are best avoided.

3. Don’t expect the car’s full resale value

Car pawn shops very rarely, if ever, offer the full resale value of a car as a short-term loan. At best, you can expect a percentage of the vehicle’s appraised value on the second-hand market.

At Pawn My Car, we’re completely transparent about the value of the loan we can provide against your car.

We make an initial offer over the phone, at the first point of contact. Once the vehicle has been assessed at a Pawn My Car branch, a second, formal offer of a loan is verbally made, which you can accept or reject.

Until an agreement is reached and a contract drawn up and signed by both parties, you’re under no legal obligation to accept our offer.

How Pawn My Car can help

Pawn My Car offers same-day loans against fully paid-up vehicles.

With Pawn My Car, you can use a car, bakkie, truck or boat that’s in your name to secure a loan quickly and easily, with no delays or laborious paperwork.

For more information, call us on 0861 112 866 or simply complete and submit our online application form. We have branches in Sandton, Durban, Gqeberha (Port Elizabeth) and Cape Town.

Complete an application now