An article was recently written on the dangers of the Pawn and drive industry. In the article, it mentioned the unscrupulous element of the market that does things illegally and treats people unfairly, most of the time acting out of the realms of the NCR.
What the article was saying is true! There certainly are these types of operations that do business in a very shady and unethical way. And one must be extremely cautious of doing business with people like that because most likely it will end in a nasty situation. These operations are also illegal in the eyes of the NCR (national credit regulator) and should be shut down.
However, in the same breath, there are also unscrupulous Pawn operators charging very high rates and not adhering to the rules and regulations of the NCR. These types of operators, amongst other things, have been known to not wait the requisite amount of time before selling o the vehicle at a value that is significantly less than market value. I’ve also heard of Pawn operators who have used the client’s car whilst in their care and have racked up thousands of kilometers!
So be wary of both Pawn your car and still Drive it and Pawn Operators, and try and deal with reputable businesses. And there definitely are reputable businesses that try their best to warn you of the dangers of doing loans like this. Lamna is a company that offers pawn transactions and gives a professional and fair service. First advance offers a professional and fair Pawn your car and still drive it option.
Please understand it’s not the fact that these two offerings are significantly different as the offering is concerned, it’s more about the actual company offering the service that counts. The pawn your car and still drive it has been in existence in South Africa for about 10 years, which is much less than the Pawn Industry which has been in existence for at least 60 years. However, one mustn’t forget that in the UK and the USA the Pawn and Drive industry has been in existence for at least 40 years
longer. In the UK it called Title Lending and, in the USA, it’s called Logbook lending.
My point is that Pawn and Pawn and Drive are both reputable ways of accessing cash for your vehicle. The Pawn model is far less risky for the lender as the asset is stored with him, henceforth it’s a cheaper option. The Pawn and Drive is much riskier as the loan is given to the client and then he is still allowed to retain control of the vehicle. This leads to all sorts of risk and pitfalls, from the clients selling the vehicle without papers to him scrapping the vehicle to him taking across the border, to him hiding the vehicle. The vehicle can also get seriously neglected and destroyed during the period of the loan, resulting in the lender getting back a worthless asset and an unpaid loan! To conclude, do your research and find a good operator that cares how he does business. Both ways of lending are great and have their place in the Credit market in South Africa.
