Guiding consumers since 2009

NCR warns against ‘pawn your car and drive it’ scheme

By Jessica Anne Wood

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.

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.”

NCR , car

Recent Articles

Featured It’s possible to change your marriage regime

Many people wed before they sign an antenuptial contract (ANC). This is especially practiced by people in customary marriages and those not clued up about the ANC. The law says if there’s no ANC before the wedding takes place, the marriage will automatically be in Community of Property. 

Keep this in mind when taking out new financial products

Adding a product to your personal finance portfolio, such as insurance or an investment, is a big decision. We found out what you should keep in mind before taking out a new product, how you can assess the products you already have, and how you can generally improve your financial position.

Are you in debt denial?

With debt levels increasing at 13% more than income levels, South Africans are more debt-stressed now than arguably ever before. This is iterated by the National Credit Regulator’s (NCR) report that nearly half of credit-active consumers in South Africa have damaged credit records. However, only a few seek the necessary help.

Why should you invest in a mutual bank?

Often when people think about banking, they always think about commercial banks. Mutual banks hardly come to mind, but these banks offer investment opportunities that are often overlooked.



Aurora Spa 100-minute Treatment Special

Price: R449
When: Until 31 March
Where: Century City

Woodstock Grill and Tap Steak Thursdays

Price: R100
When: Thursdays
Where: Woodstock

KFC 5+5 Special

Price: R65
When: Until 25 February 2020
Where: Nationwide