
Using a fully paid up vehicle to secure a loan is quick and easy. It is also one of the safest ways to get a loan against a car in Johannesburg.
In South Africa, there are two main options for securing a loan against a car. One is a standard asset-based loan. The other is a so-called “pawn and still drive it” scheme.
Asset-based loans for South Africans
Provided it’s from a reputable lender, an asset-based loan is a very straightforward loan type.
No guesswork or time-consuming investigation into applicants’ financial track records are involved. Instead, the lender offers a loan amount based purely on a professional appraisal of the car’s resale value.
An agreement is drawn up, outlining the terms of the loan; the interest rate on the principle loan amount and any initiation fee associated with the transaction.
The loan agreement is signed by both parties, and the money is electronically transferred into your bank account.
The car is held for the duration of the loan term by the lender. It shouldn’t be accessed or driven by anyone else during this time. Once the loan principle plus interest is paid back in full, the car is returned in the same condition it was left.
Why we advise against “pawn and still drive it” loans
Pawn and Drive schemes sound brilliant – but only in theory. They offer you money in the bank, along with full use of your car.
In practice, there are some serious disadvantages to consider.
The greatest of these is that most “pawn and still drive it” schemes involve signing ownership of your vehicle over to the lender.
Basically, you then pay the loan provider to rent back your own car, so you can drive it.
This type of arrangement also puts you at high risk of losing your car altogether, even if you’ve been making loan repayments.
At best, “pawn and still drive it” loans are punitively expensive ways of borrowing money. At worst, they’re outright scams.
Key advantages of collateral loans in Johannesburg
Advantages of a standard asset-based loan from a reputable loan provider like LoanAgainst are as follows:
- The loan doesn’t compromise your ownership of your car
The car is held in safe-keeping, in a highly secure facility, as collateral for the loan. Nobody else is allowed to drive it, and you don’t surrender your original vehicle registration papers when the loan agreement is made. - The loan terms are completely transparent
We don’t charge any hidden fees or early settlement penalties. Our interest rates are competitive and NCR compliant. All terms are simply and clearly communicated. - The process is quick and easy
There’s no need for complex, time-consuming loan approval processes because our loans are secured by assets of value. Once necessary paperwork is completed, you can expect funds in your account within 24 hours. - The process is 100% discreet
We don’t share information about loans with any third party. That includes credit bureaus. So a loan for your car won’t affect your credit rating (and your current credit rating isn’t relevant to us).
What we offer at LoanAgainst
At LoanAgainst, we offer the safest way to get a loan against a car in Johannesburg (as well as in Cape Town, Durban or Gqeberha/Port Elizabeth).
We also offer fast, discreet loans against other vehicle types – from bakkies to trucks – and other assets of value. For more information about using an asset to secure a loan, simply complete and submit our online application form.