People need short-term loans for all kinds of reasons, from getting through temporary tough patches to taking advantage of unexpected opportunities. But is it really safe to pawn your car, and is doing this something you should consider?

What’s involved in pawning your car?

In fact, pawning your car is an exceptionally straightforward way of obtaining funds, provided you deal with a reputable company. It’s an example of taking an asset-based loan – a type of financing that has gained popularity worldwide.

The value of the loan you’re offered will depend on the value of the vehicle you provide as collateral. It doesn’t depend on your credit history, information about your personal finances or guesswork on the part of a lender.

During the loan period, your vehicle will be kept in a secure facility. Once you’ve repaid the loan with the agreed interest, your car will be returned to you.

Case study: When pawning your vehicle may be the ideal choice

Consider the example of Mike (name changed), who owns a small company that makes professional signs and banners. Mike started the business in 2004. Despite some ups and downs, it has continued to provide valuable employment for a tight-knit group of six full-time staff members since then.

A couple months ago, Mike’s company experienced an unusually long delay in payment by a key client. At the same time, Mike hit some personal financial difficulties, due to unexpected medical bills for an aging parent.

This left Mike with a cash flow crisis. To pay staff salaries, he needed to come up with some extra funds quickly.

The options Mike considered

Mike considered applying for a bank loan. However, he was told that even if the application process went smoothly, the funds would reflect in his account only several weeks later. This would be too late. He needed the money now.

Mike wasn’t willing to approach members of his family for money, knowing that they were all facing their own financial difficulties.

Next Mike thought about his comparatively new Toyota Hilux bakkie. The bakkie was useful for work purposes, but Mike knew he might have to make some sacrifices. But would he be able to sell the bakkie in a hurry, and how much would he lose as a result of a rushed sale?

Also, Mike didn’t need the full resale value of the bakkie straight away just to cover the outstanding salaries.

The advantages of pawning a vehicle

Mike discussed his financial difficulties with a friend, who had made use of an asset-based loan herself the previous year and mentioned this as an option worth considering.

Mike went ahead and applied for an asset-based loan with Pawn My Car, offering the Hilux bakkie as collateral. Within less than 24 hours, the needed funds were in his account and he was able to pay staff their salaries.

The best part? To secure the funds, Mike didn’t need to sell the bakkie. His company picked up as clients settled their invoices and, once Mike had repaid the loan with the agreed interest, the bakkie was safely returned to him.

If pawning your vehicle may be the answer to your short-term funding needs, contact us for more information on 0861 112 866 or simply complete and submit our online application form.

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