Recently Unemployed? How to Get a Loan If You Don’t Have a Job in Cape Town
If you’re one of the many people in Cape Town who has recently been made unemployed, you may be wondering how you can get a loan to help you cover your financial obligations in the short term.
It may not be possible to get a bank loan, but a collateral loan could be available to you.
If you’re unemployed, you’re not alone
It’s important to realise you’re one of a growing number of people who have lost their jobs and are struggling to cover their expenses.
Even before the COVID-19 pandemic, the unemployment rate in South Africa for the first quarter of 2020 rose by 1% to hit 30.1%.
The number of unemployed people increased by 344,000 to 7.1 million.
4 million jobs on the line
Now, with the economy expected to contract by up to 17% this year, a further four million jobs could be lost.
Many Capetonians are being made redundant or taking enforced pay cuts.
This means there’ll be an increased demand for personal loans from banks, payday lenders and other finance providers.
Why banks typically want proof of income
Banks provide unsecured personal loans.
Your income and creditworthiness are the key factors that determine if your loan application will be successful.
If you’re unemployed, you must prove you have another source of income and the ability to repay a loan.
This income could be from a pension payout, investment income or from a part-time job.
If you don’t have any alternative income, the odds of getting a bank loan in Cape Town are negligible.
Secured vs unsecured loans
You may have to consider applying for a secured loan.
So, what’s the difference between a secured and an unsecured loan?
A bank loan is a form of unsecured loan.
The bank relies on your employment history, credit score and payment track record to evaluate risk and quantify the rate of interest on the loan.
If you fail to honour the loan agreement, the bank can hand the debt over for collection, seize your assets or approach the courts to pursue the matter.
This impacts your credit history and your ability to borrow money, secure a home loan or apply for a credit card.
A secured loan is backed by collateral.
An asset such as an investment account, home equity, motor vehicle or a high value piece of jewellery is pledged to the lender for the duration of the loan.
If the loan is not repaid in full, the lender is entitled to sell the asset to recoup the losses.
Getting a loan if you’re unemployed
If you’re unemployed in Cape Town, personal loans are available, but they’re difficult to obtain and the loan amount is limited.
An easier solution – and one that guarantees quick access to funds – is to pawn a vehicle.
With this type of secured loan, the amount of money you can borrow is based on the appraised value of your car, truck, bakkie or motorbike.
The vehicle is handed over and securely stored for the duration of the loan term.
Once the money, plus interest, is paid back in full, the vehicle is returned to you.
When is pawning a car a practical solution?
Pawning a car is a suitable alternative to a conventional loan when your loss of income is temporary.
It can help you meet your financial obligations when you’re between jobs and have the funds to pay the loan back in monthly increments.
Cape Town branches of Pawn a Car
If you’re recently unemployed and don’t know how to get a loan when you don’t have a job in Cape Town, Pawn My Car can help.
Pawn My Car is a reputable asset-based lender.
We specialise in providing cash loans backed by fully paid-up vehicles.
Our Cape Town branches are conveniently located in the CBD, Brackenfell and Heathfield.
We service clients in the central, northern and southern suburbs of the city and surrounds.
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.