Thinking of using your vehicle as security to access funds? We offer tips on how to get the best price when pawning a car in South Africa.
Find the right pawnbroker
The only pawnbroker to deal with is one that’s accredited by the National Credit Regulator (NCR). That way, you’re assured of:
- interest rates that align with NCA recommendations
- fees that are above board and clearly stated in the loan agreement
- safe storage for your vehicle during the contractual period.
More importantly, when a pawnbroker acts illegally or not in good faith, there is an entity mandated to fight for your rights.
A bona fide pawnbroker has a physical presence. It is easily contactable and conducts vehicle appraisals at a network of offices or branches located nationwide.
When a pawnbroker has been operating for a number of years, it’s a clear sign of trustworthiness.
Avoid pawn-and-drive schemes
Pawn-and-drive schemes may appear to be the ideal funding solutions. You get a loan against an asset and keep driving the car. Sounds too good to be true? It is.
These schemes get a lot of bad press and for good reason. The NCR refers to pawn-and-drive schemes as “scams” that do not fall under its jurisdiction. Here is how they work.
To circumvent the requirements of the National Credit Act (NCA), pawn-and-drive providers conclude sales agreements with their clients. They effectively purchase the car by taking legal ownership of it, rather than disbursing a loan against it.
The client is charged a monthly rental fee for using the vehicle, over and above the initiation fee and repayments required to buy the car back.
When a client defaults on one or two months’ repayments, the car is tracked down, forcibly repossessed and sold.
Have an idea of your car’s resale value
How do you know you’re getting a good deal from a pawnbroker? You determine the car’s resale value prior to negotiations.
TransUnion offers car value reports online for a nominal one-time fee. The report provides estimates of the trade and retail values, giving you an idea of what the car is worth.
For obvious reasons, pawnbrokers never offer the full retail value. They loan a percentage of the vehicle’s appraised value.
Check that the car is in good order
A car that’s in perfect condition and has a complete service record realises a higher loan amount. That’s why it’s essential to give the vehicle a spring-clean inside and out before it’s appraised.
When you sweat the small stuff, like ensuring the spare wheel, tyre iron and jack are in the boot and in working order, and the spare key is in the glove box, you’ll get a better deal.
Prepare the necessary documents
As a rule, pawnbrokers require a limited number of documents to support a loan application:
- the original vehicle registration certificate
- copies of the client’s ID
- proof of residence.
Having these documents readily available speeds up the processing time, which is typically 24 hours.
Why get a loan against a car through LoanAgainst?
LoanAgainst is a division of an NCR-accredited finance provider established in 2013. We offer cash loans against cars in South Africa and other high value assets.
Expert vehicle appraisals are conducted at our branches in Cape Town, Gqeberha, Durban and Johannesburg. Apply online now or contact our call centre on 067 115 3453 or 079 726 4690 and we’ll release the funds on the same day.