Pawnbrokers offer a legitimate alternative to traditional bank loans, but you should still be wary of unscrupulous pawnbrokers waiting to take advantage.
In this article, we look at what to consider and how to choose a pawnbroker online in South Africa.
What to consider before choosing a pawnbroker online
When you are looking for a pawnbroker online, there are a few factors to consider and questions to ask that will help you establish if they are trustworthy and legitimate.
Does the pawnbroker have physical offices?
Find out if the pawnbroker has physical offices. This will usually indicate that the lender is an established enterprise, especially if it has more than one branch.
It’s often a red flag if a lender only has a phone number and a basic website as the only points of contact.
Pawnbrokers need to value the assets they are accepting as collateral, so a legitimate pawnbroker should have physical premises.
Do they have a legitimate website?
A basic website that’s there to give false legitimacy is usually obvious. If the lender’s website feels off – lacks vital information, has only one page, contains spelling errors – go with your gut and avoid it.
Look for a lender with a website built by a professional web design company that offers lots of information and has a professional feel. The website should contain the pawnbroker’s accreditation.
Do they come recommended?
You might be able to get personal recommendations for a pawnbroker.
Ask friends, family and colleagues if they have ever used a luxury pawnbroker for an asset-based loan, and if they were happy with the service.
What do online reviews say about them?
People can be harsh with their feedback, especially online. Don’t expect all reviews to be glowing but do read feedback from previous clients. It will be clear if a lender is a scammer.
If a pawnbroker is dodgy and has overcharged on fees, misrepresented itself or scammed someone, there will be evidence in the reviews.
If a lender doesn’t have a Google listing to source reviews from, visit the HelloPeter website to find feedback. Potentially, no reviews can also be a red flag.
Do they offer the type of loan you need?
Not all pawnbrokers operate the same way. If you need to use an asset as collateral to get a short-term loan, find a pawnbroker that will accept that type of asset.
Some pawnbrokers accept gold, for example, but don’t have the capacity or experience to offer a loan against a vehicle.
Can you access the general terms and conditions of the loan?
The pawnbroker’s website should provide information about the loan terms and conditions, including the likely interest rate, loan period options and fees.
It should also have information on the loan application process, so you know what to expect and what documents to provide.
Does the loan impact your credit score?
Ask the pawnbroker if the loan will affect your credit score or if you must provide your credit history.
One of the primary benefits of an asset-based loan is that it is secured by a movable asset and doesn’t usually require credit checks.
Be sure that this is the case before you apply, or you might end up with a loan that shows up on your credit history.
Is the pawnbroker registered as a credit provider?
Choosing a pawnbroker that’s registered as a credit provider with the National Credit Regulator will ensure it is compliant with the credit regulations set out by the NCR.
Don’t take their word for it. Check on the NCR website by searching the company name.
LoanAgainst is a subsidiary of Lamna Financial (Pty) Ltd, a financial services provider and registered credit provider (NCRCP7428).
When you should consider a loan against an asset
Asset-based loans offered by pawnbrokers are a simple and quick way to secure a short-term loan using a physical asset like a car or luxury watch as collateral.
These loans are aimed at bridging a temporary gap in cash flow. They are not a long-term debt option. They are useful for businesses and individuals to bridge short-term cash-flow issues, fund business or personal growth, or take advantage of a financial opportunity.
If you are certain that you will be in the position to repay the loan within a few months, this type of loan makes sense.
Luxury asset-based pawnbroker, LoanAgainst
At LoanAgainst, we offer specialised loans against a range of movable assets, from vehicles through to luxury watches or artworks.
If you’re looking to choose a pawnbroker online in South Africa, we can assist. We have significant experience in the market, are a division of a registered financial services provider and have physical branches across the country.
Contact us on 064 976 7106 for more information or complete our online form to apply.
