In a tough economic climate, many people are struggling to make ends meet. The ability to pawn your car for cash, and still be able to drive it may sound like the perfect solution to those looking for a little extra cash to make it to the end of the month. However, Sun Finance South Africa (Pty) (Ltd), which offers this type of pawning facility, has been referred to the National Consumer Tribunal by the National Credit Regulator (NCR).
An investigation by the NCR revealed that the terms of the “pawn to drive” agreement entered into by Sun Finance were in contravention of the National Credit Act, the NCR stated.
Pawn your car and drive it found to be unlawful
In May 2017 the Tribunal declared the Allied Capital “pawn your car and still drive it” scheme unlawful and prohibited by the NCA 34 of 2005. The consumers only wanted to borrow money using their cars as security for loans,” explained Jacqueline Peters, manager of Investigations and Enforcement at the NCR.
The Sun Finance South Africa website claims that you can get cash against your car and receive the money in your bank account within 30 minutes. “No credit worthiness, credit checks, income or employment verifications are required and you will receive cash payment immediately once the deal has been approved,” explains the website.
The Sun Finance website also states boldly on the homepage that they are “registered with the National Credit Regulator and with the South African Police Service (SAPS).”
Pawning your vehicle
The requirements, according to the Sun Finance website, for pawning your car are:
- The car needs to be fully-paid up
- The car must be registered in your name (both owner and title)
- RC1 (car ownership papers)
- South Africa Identification or Traffic Registrar ID document
- Proof of address
- Spare key if available
- Insurance if available
- Service book if available
For many, their vehicle is vital for getting them to and from work. By pawning their car, if they are unable to make the repayment they risk losing their car. This scheme could result in people being in a worse financial position than the one that caused them to pawn their vehicle to start with.
Peters warned: “The NCR cautions consumers against using their cars as security for loans or pawning them since they risk losing their cars if they fail to repay the loans as agreed with credit providers.”
She added: “The NCR will continue to investigate pawn brokers who are flouting the provisions of the NCA.”