Using a Car to Get Cash in South Africa: Insider’s Guide

Using a Car to Get Cash in South Africa: Insider’s Guide
October 26, 2023 gnuworld
Using a Car to Get Cash in South Africa - Insider’s Guide

A car may not be an appreciating asset but it is an asset of value – and selling it isn’t the only way you can access this value. In fact, you can use a car to get cash in South Africa in a variety of ways.

Ways you can use a vehicle to secure funds in South Africa

Even older cars have value. There are a few ways to access this value that you may not have considered. Below, we look at ways to use a car to get cash in South Africa.

Renting out your car

Private owners of vehicles can now rent their cars to other drivers to raise cash.

A number of online platforms, such as Rent Out My Car and RentMyRide, facilitate the process. Calling themselves “peer-to-peer car rental services”, they match vehicle owners to renters, process payments and usually provide insurance for the vehicles.

Another alternative is to rent your vehicle to an Uber driver, via an intermediary like Flexclub, for an agreed monthly sum.

Of course, you won’t have access to your vehicle whenever a client is using it.

There’s a risk of damage to the car. This includes minor damage that might not be covered even if an applicable insurance policy is in place.

Also,  if the car is in a road accident when someone else is at the wheel, there could be legal and insurance-related issues to navigate.

Pawning your car

Pawning a vehicle is one of the most overlooked ways of using a car to get cash in South Africa.

This is a fast, straightforward option for raising funds, without losing ownership of your vehicle. It involves using the vehicle as security for a loan.

The loan provider keeps your car in a secure facility for the duration of the loan agreement, Once the loan is repaid, the car is returned to you.

Please note that we warn strongly against “pawn your car and still drive it” schemes (as does South Africa’s National Credit Regulator). These schemes pose an unacceptably high risk that you’ll end up losing your vehicle to the loan provider. Find out more in this Daily Maverick article.

Selling your car

Selling your car is likely to raise the largest amount of money – although once sold, you’ll obviously no longer have your vehicle.

If you need funds fairly urgently, a pitfall is that selling a car takes time.

It’s never a good idea to rush this process, or you risk getting less than its true market value. Rather investigate all offers and options.

For example, get offers from multiple dealers and consider advertising the car directly yourself (a less convenient option but likely to secure a better price).

In South Africa, also remain mindful of your security. For example, don’t agree to meet potential buyers at addresses they give you or at times or places that could be unsafe.

Prerequisites for using a vehicle to get cash

Before you can use a car to secure funds, the car must be fully paid off. It can’t be financed by a bank or another financial institution.

The car must also be registered in your name.

Choosing the best alternative for your financial situation

Before you decide which way to use your car to get cash, consider your financial situation.

You need cash now, to bridge a short-term gap

You might need a quick cash injection to cover unexpected expenses or to take advantage of an opportunity.

If this is a short-term situation and you expect funds to come your way in the near to medium term, pawning your car is a good option. It means you won’t have to sacrifice ownership of the car, or put up with other people driving it (and potentially damaging it).

Car pawn agreements are designed to provide short-term finance.

You need cash but aren’t realistically expecting your financial situation to improve

If you are short of cash and the situation isn’t likely to improve over the short term, a loan or car pawn agreement isn’t the best answer. No type of loan is a good idea if you’re not certain you’ll be able to pay it back.

Instead, it may be worth investigating whether you can rent out your car. This could supplement your monthly income.

If you decide to sell your car instead, aim to get a good price rather than selling it in a hurry.

If you have a lot of debt and your financial situation is becoming overwhelming, it’s worth seeking professional debt counselling. Even if it takes time and perseverance, there is always something that can be done to resolve a stressful financial situation.

You need funds but have plenty of time

If you don’t need money in a hurry, can afford to wait a few months and aren’t reliant on your car, selling the vehicle will get you the most money upfront.

Time allows you to market your car properly – privately or via dealers – and wait for an attractive offer.

How to get the best deal when using your car to get cash

No matter which route you decide on, make sure you get the best deal.

Do some research to find the best dealer or lender. Read online reviews to find the most trusted, well-established company.

Find out what your vehicle’s current market resale value is. This will ensure you get a good deal whether you sell or pawn your car.

Also keep your car in good condition and try to stay up to date with services.

How LoanAgainst can help

LoanAgainst is a division of a registered financial services company, with branches in major cities across South Africa. Advantages of our car pawn service:

  • fast access to funds
  • no hidden costs or early payment penalties
  • no impact on your credit rating
  • discreet and confidential
  • competitive interest rates
  • you retain full ownership of your car.

For more information about pawning a car as a way to get cash in South Africa, call us on 079 726 4690 or simply complete and submit our online loan application.