Who Offers Secured Loans in South Africa? Compare Best Options
Generally, many banks have stringent requirements that some people cannot meet. If this is your case, we urge you to keep reading this article to know your options. Specifically, we will talk about financial companies that offer Secured Loans in South Africa. We will spare no detail as to how they work, where you can find them, what you need to know, and what documents you must have available. Also, we will warn you against a type of loan that might not be convenient for you.
Is it Possible to Borrow Money against Property in South Africa?
Let’s start from the basics: what is a secured loan? This credit facility works on the basis of collateral. You borrow money from a credit institution and in order to prove that you are willing and able to reimburse the amount of the loan, you pledge an asset as a guarantee of the loan. So, if you don’t pay the loan back, this asset will be used to cover the loan.
That said we’re able to move on with how to borrow money against property in this country. In South Africa, there are numerous companies that offer this kind of loan. Usually, these loans are offered for companies that need great amounts of cash quickly. They tend to be short-term loans, and easier to get since the credit company won’t look at your credit history, or run affordability checks on you. All they will need to assess is that the property is under your name and that meets their requirements.
For instance, the company First Advance offers loans starting from R100 000 and with maximum repayment periods of six months. To be granted this loan, the property must belong to your company and be valued in more than R500 000.
How does a Secured Loan against my Car Work?
Another way of getting a short-term loan with a fast payout and without doing tons of paperwork is requesting a secured loan against your car. With this loan, you use your car as collateral to ask for money from a borrower. The lender company will assess the market value and condition of your car (they’ll need to have your car checked by a mechanic of their choice), and make a quote for your loan. If you accept the loan offered by the lender, your call will be stored in their facilities until you pay off your loan. These loans are approved really quickly because no credit checks are run on you. They only verify that the car you are offering as collateral is your property and that it is in good working conditions.
Is it Convenient to Ask for a Loan against Life Insurance Policy in South Africa?
Your life insurance policy can also serve as security for a loan. You request money to a lender company and if you cannot pay back for it, the lender will be reimbursed from your life insurance policy. Life insurance is designed for the purpose of protecting your family if you pass away. It’s a way of helping them out when you’re gone. So, the risk is too big for you. If you are unable to pay the installments of your loan, you risk losing your money and the money that was destined to protect your beloved family.
How do Pawn Loans Work?
Another quick way of accessing short-term loans is pawning some of your goods. This is also a secured loan, that is, if you are not able to pay back the loan, the borrower will keep the good you used as collateral so as to be reimbursed. However, with pawn loans, you have to leave the item used as a guarantee with the lending company.
Let’s use an example to illustrate this concept. You need money urgently and you don’t qualify for a personal loan at a bank or you don’t have time to wait for the approval process. You can go to a Pawn Shop and leave your car with the lender and you take it back when you canceled your loan. There are also some pawn shops that offer pawn and still drive loans. So you don’t have to leave your car in the lender’s facility. This practice is not that common, though.
Pawn shops in South Africa are licensed and have to meet certain regulations. There are various pawn shops where you can take out quick loans that may work like payday loans. That is to say, you pay the amount of the pawn when you cash your salary.
What are the Requirements for a Cash Loan against Valuables?
Secured loans such as these also include other valuables such as jewelry, gold, electronics, power tools, and others. The process is very similar to the ones explained above. You bring your valuables to a pawn shop, you discuss with them what you need (what amount of money, for instance), they evaluate your valuables to see in what conditions they are (for example if it’s gold they’ll need to confirm it is original and its quality), and then they make you a formal offer regarding your loan. If you accept this offer, you will have to leave your valuables with them and you will receive the money you borrowed. Usually, these loans are payable within a month. Once you repay it in full, your valuables will be given back to you.
Now that you know how it all works, let us review the requirements you need to meet to have access to these types of loans.
- You need to be more than 18 years of age,
- Provide the lender your ID or your Driver’s License if you are a South African,
- Provide the borrower your Passport if you are a foreigner,
- Being the legal owner of the valuables.
You know what a secured loan is and how it works. Now let us present to you the main options you have in South Africa.
How to Borrow Money at Bennies Pawn Shop
Bennies Pawn Shop is a company that offers pawn loans. They have been working in the market for over forty years. This pawn shop also buys and resells valuables. With them, you can pawn your car, jewelry, electronics, power machines, pieces of furniture, among other products. They claim they have the lowest interest rates of the market and that they are duly licensed as credit providers.
Find the best loan of South Africa
To borrow money from this company you need to take the item you want to pawn and tell them how much cash you want. They will look into the item you brought and tell you how much they can offer you and the terms; simple as that. Unfortunately, they don’t have an online platform or application like OLX where you can fill in to start your loan process. The only way to reach them is either by phone, in-person, or via e-mail.
Can I ask for 10 000 rand Loan by pawning my car?
If you are unemployed or don’t meet the requirements asked for by most banks and other lenders, that’s not the end of it; there is an alternative. You could pawn your car. In South Africa there are many companies that accept your car as guarantee for your loan. These loans are usually short-term in nature: usually a month. The lender keeps your car in a secure place until you pay back the amount you borrowed. The amounts you can borrow will decided by the provider, generally you can ask for R2 000, R5 000 and up to R10 000.
3 Things you Need to Provide Ez Pawn for Cash Loans
Another reputable company to pawn your items is Ezpawn. Here you can also pawn, sell or buy. They offer short term loans on your valuables and once you’ve agreed on the amount offered and the terms, you get the money instantly. They assert that they offer pawn loans at any time, all days of the week. This is very convenient since emergencies may happen at any time, and it’s good to know that there will be somewhere to borrow money from outside business hours.
For you to take out a loan at Ez Pawn against a valuable you need to give them the following information:
- Your ID (South African)
- Information as to where to contact you
- Proof of the address where you reside
That’s it! Another plus for this company is that if you want, you can renew your loan for an extra 30 days if you want to.
What Kind of Items Can be Used to Ask for a Cash Loan at Xcelsior?
Finally, the last company we want you to become familiar with is Xcelsior. This company specializes in loaning against vehicles. You can use your car, a truck, your bicycle, your motorbike, etc. At Xcelsior you will find loans starting from R5 000 and with a maximum amount of R250 000.
If you take out a loan with them, your vehicle will be stored at their facilities and completely insured. After you finish up the loan process and leave your item, you will be transferred to your account immediately. In contrast to the other companies mentioned above, Xcelsior does offer you the possibility of starting your loan request online.
Does Lamna Offer Loans against Assets?
When talking about secured loans in South Africa we cannot forget to mention Lamna Financial. This is a company that specializes in offering loans against valuables. The range of assets and items they accept is vast: from jewelry or artwork to vehicles such as cars or yachts or boats. The amount of money that you will be able to request for will depend on the value of the item you use as security for the loan.
The process to request these loans starts by you filling out an online application where you provide your personal information, the amount you would wish to borrow and the asset you will use as guarantee. After this, you will need to visit one of Lamna branches to have your item assessed and know the final offer made by this company. Finally, if you accept the loan you will have your money on your bank account within 12 to 24 hours.
3 basic requirements to get a R250 000 personal loan
No matter how much money you want to borrow, you will always have to meet certain requirements. Why? Well, you probably wouldn’t lend someone you didn’t know R50 000 just like that, would you? Credit lending providers need to have some assurance that you will be able to afford the loan, that is, to pay them back. What each institution might ask you will depend on that specific company, however these are the 3 most common requirements to get a personal loan asked by lenders:
Providing your ID (South African)
Showing your payslips and/or bank statements
Having a bank account under your name.
Is it possible to request unsecured personal loans of up to R300 000?
Personal loans are in general unsecured, no guarantee is requested. You will only be asked to meet certain requirements and, most commonly, to have a permanent job. Not all credit lending providers offer this amount of money; you will most commonly find this figure at traditional banks. Thus, you should also take into consideration that you might be able to be requested to earn a minimum amount of money per month; no matter if you ask R20 000 or R300 000. Generally, the amount they ask you to earn is a minimum of 2 000 rands, but this number might vary from bank to bank.
These banks also offer protection plans that will cover you in the event of an unfortunate circumstance: if you are permanent disabled, for instance. It might be a good idea to take this kind of insurance to protect yourself and your family.
Here we are, at the end of our article. We sincerely hope that we’ve helped you understand how secured loans work. After reading this text, you will know what types of secured loans there are in South Africa, where to get them, what the requirements are. We need to stress once more that you should be careful with one of them: borrowing against your life insurance policy. Our job is to show you your options and help you make the best decision. If you need further assistance or if you have some comments, go ahead and write to us.
Questions and answers
May I be able to get a loan against my full paid house?
Yes, it will be possible for you to obtain a loan against your full paid house in South Africa. This type of loan is best known as a home equity loan or a mortgage band loan. There are some loan providers you can resort to in order to borrow money. For instance, you can consider Standard Bank, Absa, Nedbank, among others.
Can I take a loan against a residential property as security, and if possible which institution would be able to help?
Yes, of course. It is possible to obtain a loan against a residential property taken as security, which is called a home equity loan or second mortgage. This will let you obtain money against your home. You can resort to some banks like ABSA, FNB, NedBank or Standard Bank. You can also turn to private financial companies such as SA Home Loans or Bridge Loans.
I need a loan against a paid up house worth R850,000 bought cash, and I'm currently unemployed. I want to start a business.
If you need a loan against a paid up house worth 850,000 rand, it may be difficult to get it as usually the companies require applicants to provide a regular source of income and a good credit history. Probably, you can resort to any help or funding provided by the government to start your business.
I have a property registered in a Trust. Unbounded, in Silver Lakes, Pretoria. 90 % finished. I need a loan against the property. Payback from sale of the property.
If you are looking for a secured personal loan against your property in Pretoria, then you should resort to the private company First Advance. You can obtain a sum of money ranging from 100,000 rand to be repaid in six months, for instance. The property should belong to your company, and it must cost over 500,000 rand.
Is there a company that can lend you money when you use your house as guarantee?
There exist a private company called First Advance which offers loans with a minimum amount of 100,000 rand and with a repayment period of up to six months. In order to be eligible for this loan, the house offered as a guarantee should belong to a company and its value should be more than 500,000 rand.
I need a loan against my house.
If you are looking for a personal secured loan and use your property as a collateral, you can apply for the money you need with the financial company First Advance. The sum you can obtain will depend on the value of your asset, which will be determined by the entity. Bear in mind that loans start from 5,000 rand.
I need cash against my life policy.
There are some financial companies in South Africa that accept life policies as a collateral in exchange for granting some money. Please, remember, if you request money, and then you cannot pay your loan back, the lender will take money from your life policy. One entity you can resort to is, for example, NedBank.
Can I use my property as security?
In South Africa, there are some companies that offer secured loans against properties, which means you can obtain a loan in exchange for providing a collateral as security. Therefore, you can resort, for example, to First Advance. The amount of money you can borrow will depend on the value of your asset.
Can you use land as collateral for a personal loan?
Yes, it’s possible but, the entity you work with will decide if they accept it.
What is an example of an unsecured loan?
As it was stated, unsecured loans are those who don’t need collateral. Personal loans are the most common but, student loans or, even credit cards can also be unsecured loans.
Do I need a secured loan to buy a house?
Yes, as the sum of money needed for a house is high, home loans are issued like secured loans.