
If you need a loan and you have a personal item of value such as a paid-off vehicle or a luxury watch, you can use it as collateral on a short-term loan.
This type of loan is known as an asset-based loan. You can use many types of valuable personal items to secure a loan quickly and discreetly.
If you’re considering a loan against a personal item of value in South Africa, our article covers everything you need to know before applying:
- when a loan against a personal item makes sense
- how much you can borrow against a personal item
- examples of ideal scenarios for asset-based loans
- what assets can be used to secure a loan
- how these loans compare to bank loans
- how to get a loan against a personal item with LoanAgainst.
When a loan against a personal item makes sense
A loan against a personal item is ideal for a temporary lack of funds. For example, if you’re expecting a payment but you need money in the meantime to cover an unexpected bill.
A quick loan against an item of value that you own, such as diamond jewellery or gold coins, can cover this gap until you get your expected payment.
If the lack of funds isn’t temporary – and you’re not confident you’ll be able to pay back the loan within a reasonable amount of time – an asset-based loan isn’t the way to go.
How much we can lend
The loan amount is 100% dependent on the value of the personal item you put up as collateral. The personal item or asset is what secures the loan. It will need to cover the loan amount should you default.
Because items vary widely in value, so do loan amounts. In the past, we’ve approved loans ranging from a few thousand up to several million rands.
Case studies: the value of loans against personal items
We offer loans against personal items to businesses and individuals. These loans work well in a variety of scenarios.
For example, businesses often get an asset-based loan if there’s a sudden opportunity to grow the business. Let’s say Derrick owns a printing company and he hears about another printing company that has gone out of business and is selling its valuable equipment at a really low price.
If Derrick doesn’t have the cash available – but knows he quickly will once the new printer is up and running – he can use an asset-based loan to bridge this gap. This way, he hasn’t missed out on an opportunity to grow his business.
Similarly, with loans for individuals, an asset-based loan bridges the gap between the need for funds now and an anticipated payment in the near future.
Let’s say Claire is expecting a large refund from SARS but it might take a few weeks to be paid out. In the meantime, she needs to get her car fixed or she risks losing her job because she can’t get to her shifts on time.
A short-term loan against her engagement ring, for example, will allow her to get the car fixed and keep her job. Once she gets her refund, she can repay the loan and her engagement ring will be returned.
What personal items you can use to secure a loan
Many personal items of value can be used to secure a loan. These items must be owned by you, preferably with proof of ownership, such as an invoice. In the case of a loan against a car, the vehicle can’t be financed by the bank. It must be paid off in full.
Examples of personal items of value that you can use to get an asset-based loan include:
- cars, trucks and motorbikes
- fine art and antiques
- gold and jewellery
- luxury watches
- yachts and boats.
How this type of loan differs from a bank loan
Bank loans are known as unsecured loans because they don’t use an item of value as collateral. Instead, you tell the bank your income, credit history and other personal details so it can assess your suitability for a loan.
An asset-based loan is a secured loan because it uses a personal item of value as collateral. This is why an asset-based loan doesn’t require credit checks and you don’t need to divulge your income.
The loan requires you to temporarily give the lender custody of your personal item. Once the loan is repaid, your asset it returned and your ownership is unaffected. You can use the item as collateral on another loan in the future.
Getting a loan with LoanAgainst
LoanAgainst offers fast, discreet loans against personal items of value in South Africa. We have offices in most major cities across the country.
We’re registered with the National Credit Regulator (NCR) and we offer competitive interest rates and a transparent fee structure with no hidden costs or penalties.
Apply online now or contact us on 079 726 4690 to find out more about getting loans against personal items of value in South Africa.