Short-term loans for vehicles are filling an important gap in the South African loans market.

As more South Africans battle to make ends meet and personal debt continues to rise, banks become more hesitant to grant competitive, short-term loans. Getting a loan is especially challenging if you’re self-employed or have a poor credit rating.

An advantage of short-term loans for vehicles is that they’re available to anyone who owns a car, bakkie, motorbike, truck or even boat – quickly, easily and at reasonable rates.

How vehicle-backed loans work

Short-term loans for vehicles are quick, easy and affordable. All that’s required is a vehicle appraisal, a signature, and an electronic funds transfer. At most, the entire process takes a day.

Here’s a quick overview of how the vehicle loans process works:

1. The lender assesses the value of the vehicle, and offers a cash amount based on its age, make, model, condition and mileage.
2. Once the loan agreement is signed, and the vehicle is handed over for safekeeping, the money is transferred into the client’s account.
3. At the end of the term, and provided the loan, plus interest, has been settled in full, the vehicle is returned to its owner.

Key advantages of borrowing money against paid-up vehicles

Along with a rapid turnaround time, there are advantages of borrowing money against a paid-up vehicle, key of which are:

1. Privacy – short-term loans against vehicles are among the most discrete types of loan around. With a vehicle-backed loan, your credit score is not affected in any way, allowing you to apply for a line of credit sometime in the future.
2. Asset retention – although you surrender your vehicle as security for the loan, you get to drive it away at the end of the term. The best short-term loan providers insure your vehicle while it’s kept in storage.
3. Flexibility – providers of loans for vehicles offer flexible repayment terms that can range from a few months to a year.
4. Transparency – legitimate short-term vehicle loan providers in South Africa charge competitive, NCR compliant interest rates and fixed fees, as outlined in contracts.

Why ‘pawn and drive’ schemes are not recommended

There are a few different types of vehicle-backed loans available in South Africa, one of which is ‘pawn and drive’ loans. With these loans, the finance provider lends you money and allows you to continue using the vehicle.

Although this may sound attractive, there’s one major hitch: you’ll be expected to relinquish ownership of your vehicle by signing it over to the lender. To add insult to injury, you may even be charged a monthly rental rate for the ‘privilege’ of driving the car.

These types of vehicle-backed loans should be avoided at all costs.

How short term loans for vehicles have helped South Africans

Who borrows money against their vehicle? Here are three real-life examples of South Africans who’ve leveraged vehicles for cash (names have been changed to protect the privacy of the individuals):

Joseph, an entrepreneur and small business owner

Joseph needed a quick cash injection to maximise future profits. He had no assets to liquidate, and the bank was loath to lend him money due to cash flow fluctuations. In desperation, he used the company’s double cab Toyota bakkie as collateral for a loan. Within 48 hours, Joseph had the funds he so desperately needed to purchase the equipment and inventory required to fulfil a major million-rand contract.

Aphiwe and Themba, parents of a baby born with a cleft palate

Aphiwe and Themba were delighted to welcome a new child into their family. The baby was, however, born with a cleft palate. The costs for the initial treatment were estimated at between R60 000 and R100 000. Although Themba had comprehensive medical aid for the family, it did not cover the full amount. Family and friends were unable to assist, but Themba used his low mileage VW Polo as security for a loan. Little Zintle now has a smile to match her name; “the beautiful one”.

Natasha, innovative businessperson

Natasha was advised to take out a patent to protect a new product she’d designed. The problem was she didn’t have the R30 000 required for the patent application. Her late model Chevrolet Spark came to the rescue, and within six months she had the patent – and her car safely back in the garage.

Where to get a short-term vehicle loan within 24 hours

Do you have a dodgy credit rating but need to borrow money urgently? Your fully paid-up car, boat, motorbike or bakkie is the key.

With Pawn My Car, you can use a car, motorbike, bakkie, truck or boat that’s in your name to secure a loan quickly and easily, with no delays. For more information, contact us on 086 172 9648 or simply complete and submit our online application form.

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