Collateral loans in South Africa tend to be faster and easier to access than other types of loans. Also known as secured loans, they are an increasingly popular alternative to traditional, unsecured bank loans.
Jump to section:
- what are collateral loans?
- examples of collateral
- some advantages of collateral loans
- when to get a collateral loan.
What are collateral loans?
Collateral loans use an asset to secure the loan amount. In other words, the lender holds something of value from the borrower until the loan is repaid.
Common examples of collateral
Collateral can be any asset that the lender could use to recoup the loan amount if the borrower is unable to repay the debt.
Common examples include property, business equipment, vehicles, stocks and other luxury assets such as jewellery and art.
Advantages of collateral loans over unsecured loans
Most bank loans take the form of unsecured loans that use the borrower’s credit rating and income to gauge whether they’ll be able to repay the loan.
These loans involve lengthy applications with supporting documents and the need for life, disability and retrenchment insurance.
With collateral loans, there’s no need for guesswork about the borrower’s ability to repay funds. As long as the asset covers the loan amount, income and credit rating are irrelevant.
Because of this, collateral loans don’t require credit checks or proof of employment.
When a collateral loan from Lamna is a good idea
At Lamna, we offer short-term loans secured by a range of personal assets, from vehicles to jewellery, gold, luxury watches or works of art.
Collateral loans are ideal for bridging a cash-flow shortage or to allow you take advantage of an opportunity when you know you’ll be able to repay the loan per agreement in the near future. An example is if you’re expecting a payment but it hasn’t yet come in.
Collateral loans like the type offered by Lamna are fast and discreet. Because no credit checks are needed, loans can be approved quickly – and funds are typically paid out within just 24 hours.
For more information about collateral loans in South Africa, call or WhatsApp us on 086 111 2866 – or simply apply now, using our online application form.
ILLUSTRATIVE EXAMPLE
Client borrows R10,000 for 90 days.
Loan Amount | Repayment Period | Monthly Interest | Total Cost of Loan | Initiation Fee | Monthly Fee | APR |
|---|---|---|---|---|---|---|
R10 000 | 3 months | R500.00 | R2 914.50 | R1 207.50 | R569.00 | 60% |
Fixed rates range from 36% to 60% APR and payment options range from minimum 3 to maximum 24 months. Apart from the initiation and monthly fees shown below, the only additional fee is credit life insurance if the borrower does not have this already.
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