Pawning Your Car for Cash: What to Consider
You’re in a bit of tight financial spot and need cash in a hurry.
Pawning your car for cash is a feasible solution. But before you rush off to the nearest lender, there are crucial factors to consider.
The loans provider
Who you borrow money from is the most important decision you’ll have to make. As your vehicle is held as security for the loan, it’s vital you choose a reputable asset-based loan provider, with interest rates that comply with the National Credit Regulator (NCR).
Avoid nasty surprises by finding out a little about the company. Ideally, you’ll want to do business with a reliable, well-established finance company that has a physical footprint, with branches in more than one location.
Pawn and Drive schemes: yes or no?
It’s important to familiarise yourself with the various types of asset-based loans and “pawn your car for cash” schemes. The latest trend to hit South Africa is “pawn and drive” schemes.
This type of loan agreement allows you to borrow money, and continue using your car. At face value, this sounds great. In reality, it typically involves signing over ownership of your car.
Effectively, you then buy it back once you’ve paid off the loan amount plus interest. Some companies will even charge you rent to drive the car.
With this type of scheme, you stand a high risk of losing your vehicle. So we give pawn and drive schemes a resounding “No”.
The standard asset-based loans process
Be clear on how the loan process works and read the fine print before you sign any loan agreement. With a standard “pawn your car for cash” agreement, your vehicle will be held in safekeeping by the loan provider, as security for a loan.
You retain ownership of the car, and once the capital amount and interest is paid in full, the car is yours to drive away.
Vehicle assessment process
Find out how the lender assesses the value of the car. It should be based on the vehicle’s condition, age, service history, mileage and current dealer values.
Before you accept the loan, browse through online showrooms or chat to a few car dealerships to determine the cash value they’d ascribe to your car.
Is pawning a car for you?
Once you understand the ins and outs of an asset-based loan agreement, you have to decide whether it’s the best fit for you.
You’ll have to make do without a car for the duration of the loan term, and you’ll usually pay a higher interest rate than for a traditional loan from the bank.
However, you’ll get your money straight away. You don’t need to provide proof of income or employment, and no credit check is performed. This is because the value of your car secures the loan.
When to pawn your car
Pawning your car can give you immediate access to cash, so it’s an emergency lifeline for unexpected expenses. There are no delays because there’s no need for time-consuming credit checks or approval processes.
Even if you’ve got a poor credit record and have been turned down by the banks, an asset-based loan is an available option.
Another advantage of pawning your car is that it doesn’t involve putting your other assets, including your home and business, at risk.
Getting a loan from Pawn My Car
Pawn My Car is a registered short-term loans provider with branches in Cape Town, Johannesburg, Bloemfontein, Durban and Port Elizabeth.
Our loans application process is simple and transparent, and our interest rates are NCR compliant. For more information, contact us on 086 172 9648 or simply complete and submit our online application form.
