For individuals and businesses, asset loans are making it easier than ever before to access finance in South Africa. At Lamna, we specialise in offering loans against personal assets.

Article at a glance:

• how banks are failing to meet modern finance needs
• an introduction to asset loans and what they are
• the popularity of asset loans around the world
• advantages of asset loans over bank loans
• where to get an asset loan in South Africa.

How banks are failing to meet modern finance needs

In many ways, banks are failing to adapt to the modern finance needs of people and businesses. There are more alternative borrowing options available these days and most people have a better understanding of their financial needs and capabilities.

Traditional bank loans can be very inflexible when it comes to qualifying criteria. Such restrictive criteria automatically disqualifies a massive proportion of South Africa’s small businesses, start-ups and individuals from being considered for a loan.

They often require time-consuming and intrusive loan-approval processes that many people question the need for. With the reality of data breaches, people are right to be wary of providing sensitive information even to a large and established bank.

Some banks cling to outdated and bureaucratic systems that require massive amounts of time and paperwork.

What are asset loans?

An asset loan is a short-term loan that uses a physical asset as collateral. The resale value of the asset is what determines the amount of money that can be borrowed.

This asset can be any physical asset that you fully own and don’t owe money on. For example, a vehicle that is still financed by the bank can’t be used as collateral.

The lender will take temporary possession of the asset while you repay the loan. Once the loan and the interest are repaid, the asset is returned.

This type of loan doesn’t affect your ownership of the asset. You can keep your investment portfolio intact but still use your asset to secure funding.

Global popularity of asset loans

Over the last 15 years, there has been massive growth in asset-based lending around the world. Individuals and businesses are using asset loans as a simple and fast way to secure funding.

The asset-based lending (ABL) market was valued at US$561.5 billion in 2021. According to recent market research, it’s projected to reach more than 1.7 trillion by 2031.

Advantages over traditional bank loans

Asset loans allow businesses and individuals to access fast and discreet loans without the need to disclose too much sensitive information, such as bank statements and credit scores.

For individuals in need of funds

For an individual needing a loan, banks can be a time-consuming and frustrating option. Banks require a lot of supporting documentation, such as bank statements and payslips. They also require you to supply proof of income, preferably with full-time employment.

Not everyone gets a salary at the end of the month. Many people don’t feel comfortable disclosing this information.

An asset loan doesn’t require you to have an income or be employed because the loan is secured by the asset.

A traditional bank loan also delves into your credit history, so you’ll need a good credit score to qualify, which is something that not everyone has.

Traditional bank loans also impact your future credit score. Asset loans don’t.

For small businesses that need access to finance

Traditional bank loans for small businesses are even more time-consuming than those for individuals. These loans also require a lot of paperwork because you have to prove that your business is viable and able to repay the loan.

This can mean submitting years’ worth of financial statements. It also means that a lot of newer businesses and start-ups might be automatically disqualified because they don’t have the necessary documents.

With an asset loan, a business asset such as a vehicle secures the loan. There’s no need to submit reams of paperwork.

Asset loans from Lamna – revolutionising access to finance

At Lamna, we provide asset loans based on a range of moveable assets. For almost a decade, we have been providing safe and discreet asset-based loans ranging from a few thousand rands up to R20 million and more.

We’re regulated by the NCR, so there are no hidden fees or unexpected costs. To get an asset loan from Lamna, you can apply online, WhatsApp us or call 086 111 2866 to start the process or to get more information on asset loans and how they work.