The Safest Way to Get a Loan Against a Car

The Safest Way to Get a Loan Against a Car

High numbers of finance companies are offering cash loans for cars. Not all of them are fair. This article tells you what to look out for.

By now, it’s likely you’ve been exposed to at least a few advertisements offering vehicle-backed short-term loans. Your fully paid up motor car is the conduit to cash, and you don’t need a sky-high credit rating or steady stream of income to qualify.

Dozens of finance companies in South Africa are now offering a range of “cash for car” lending schemes.

Some are standard low-risk asset-based loans, regulated by the National Credit Regulator (NCR). Others are “pawn and drive” schemes that have a nasty sting in the tail.

Asset-based loan for a car

An asset-based short-term loan is the safest way of borrowing money against your car.

With a standard asset-based loan against a car, you are lent a sum of money and your vehicle is held in safekeeping until you have paid off the capital plus interest. The amount of money the provider is prepared to lend you is based on an independent assessment of the market value of your car.

No one has access to your vehicle while it is in storage, and you do not have to sign over ownership to the lender. It’s simply held as surety for the loan.

The best asset-based lenders allow you to extend the period of the loan agreement, provided you are up to date with the payments. They also won’t impose prepayment penalties for paying off the loan before the agreed term is up.

Warning about “pawn and drive” schemes

“Pawn your car and still drive it.” Unfortunately, that sounds too good to be true because it is.

In practice, this type of vehicle title loan is typically activated only once you’ve signed over ownership of your car to the lender.

You can continue driving the car, but you may have to pay the lender rental for the duration of the loan term. So you have the car, but actually, it’s no longer yours.

Once you’ve paid back the money you borrowed in full, you have to buy the car back from the loan company. That’s not where the bad news ends. If you can’t pay back the loan, the company takes your vehicle in lieu of cash, or renews the loan for a large additional fee.

“Pawn and drive” schemes may sound like manna from heaven, but the reality is that they’re high-risk loans, often with hidden costs and exorbitantly high interest rates.

Why choose Lamna for car loans?

At Lamna, we offer fast, discreet loans against the value of fully paid up assets, including cars. We’re a well-established, reliable company with branches nationwide.

With Lamna, you do not lose ownership of your car when you’re granted a loan. We hold it in a secure facility, but it remains in your name. Once you’ve paid back the loan with the agreed interest, your car is returned to you. You won’t be tricked into additional payments, or into losing your vehicle.

Our interest rates are compliant with the National Credit Act, and we offer more competitive loan amounts than many “pawn and drive” lenders.

For more information about using a car to secure a short-term loan, contact us on 086 111 2866 or simply complete and submit 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.

APR & Loan Repayment Period

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.

Non-Payment

Non-payments may result in the matters being escalated.

Renewals

All accounts may be renewed if they are up to date.

Collection

All payments are made via EFT or direct deposits into Lamna’s bank account. There are no debit orders.

The Safest Way to Get a Loan Against a Car

Apply Online

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The Safest Way to Get a Loan Against a Car

Apply Online

Hidden

The Safest Way to Get a Loan Against a Car

Apply Online

The Safest Way to Get a Loan Against a Car

Apply Online

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