SE­CURED LOANS

CityPress - - Business -

Cash Cru­saders is known for giv­ing con­sumers quick cash in ex­change for their un­wanted goods. Des­per­ate con­sumers of­ten take ad­van­tage of this ex­change dur­ing dif­fi­cult times, par­tic­u­larly af­ter over­spend­ing in the run-up to Christ­mas. But now the na­tional fran­chise chain has launched Pawn Ex­press, which of­fers con­sumers the op­tion to bor­row up to R8 000, us­ing their valu­ables as se­cu­rity.

You can ap­ply for the loan on­line and within 14 hours of your sub­mis­sion, Pawn Ex­press prom­ises to con­tact you and di­rect you to your lo­cal store to con­clude the agree­ment. They even of­fer a free col­lec­tion ser­vice to all cus­tomers if the goods you want to use as se­cu­rity are too large to trans­port to the store.

Se­cured loans of this na­ture are ap­peal­ing be­cause there are no credit checks or bank state­ments re­quired and you can use your as­sets as col­lat­eral with­out hav­ing to sell them.

The only doc­u­ments you would have to pro­vide are your iden­tity doc­u­ment and, “where pos­si­ble”, proof of own­er­ship of the as­set.

Legally, ac­cred­ited lenders must do af­ford­abil­ity as­sess­ments, which in­clude cal­cu­lat­ing your credit score and snoop­ing through your bank state­ments, be­fore lend­ing you any money.

How­ever, Pawn Ex­press gets away with not do­ing this be­cause you leave your item as se­cu­rity for the loan. The loan, in turn, is based on the prod­uct that you bring into the store.

“A con­sumer must be care­ful to make sure that the type of loan they are en­ter­ing into is clearly de­fined. If the con­sumer is pawn­ing an as­set, the pro­vi­sions re­lat­ing to a pawn trans­ac­tion must ap­ply. There are cer­tain con­ces­sions such as the credit provider not hav­ing to con­duct an af­ford­abil­ity as­sess­ment.

“How­ever, if the con­sumer re­tains pos­ses­sion of the as­set, this is not clas­si­fied as a pawn trans­ac­tion and there are stricter pro­vi­sions of the Na­tional Credit Act that must be com­plied with.

“Fur­ther, it must be iden­ti­fi­able if the en­tity giv­ing the loan is in fact a credit provider and reg­is­tered as such,” ex­plains Nthu­pang Magolego, se­nior le­gal ad­viser at the Na­tional Credit Reg­u­la­tor (NCR).

SO, WHAT’S THE CATCH?

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