Using Your Car to Get Cash: What You Need to Know

Using Your Car to Get Cash: What You Need to Know
July 19, 2019 gnuworld
car to get cash

A car is a valuable asset and, when needed, can be used in more than one way to secure cash.

Ways you can use a car to get cash

An increasing number of car dealers in South Africa have online platforms, allowing car owners to sell their vehicles easily and quickly.

The added convenience may come at a price though, in the form of a lower offer for your car than you’d get selling it privately.

Another industry that has grown rapidly online is car pawn companies, offering loans for cars. The attraction is that you can get cash quickly – without having to sell your car, and without completing the stringent finance approval processes associated with bank loans.

Cash for cars operators can provide a valuable lifeline to individuals struggling with short-term cash flow issues. However, there are also some potential risks and disadvantages to consider.

Here are some important things you need to know before you trade your car for cash.

1. Your car must be fully paid up

If you used a bank’s car finance product to purchase your car, your loan amount must be fully paid off before you’ll be able to sell your car or use it to secure a loan.

This is because the title deed for your car will be held by the bank until the loan is settled.

Once your car is fully paid up, the title deed will be transferred to you. You’re then free to do as you please with your vehicle.

2. Do your homework

It’s a bad idea to sell or pawn your car without having an idea of its current market value.

Knowing the book and trade value of your vehicle is critical for negotiating a good price for your car – and for knowing when to walk away from a bad deal.

3. Match your options to your financial situation

It’s important to have a realistic understanding of your financial situation before trading your car for cash or choosing to pawn it.

If you have short-term cash flow issues

If you’re experiencing short-term cash flow issues and need funds, a car pawn deal may be your best option.

You won’t lose ownership of your vehicle, provided you settle the loan and agreed interest within the loan period. The only cost will be the interest on your loan.

If you need cash now but don’t expect your financial situation to improve

If you don’t expect your financial situation to improve, it’s best not to pawn your vehicle. That’s because if you won’t be able to repay the loan and interest, you risk losing ownership.

Instead, it may be best to consider selling your car for cash.

If you’re struggling with financial problems created by debts that you’re unable to pay, it’s advisable to seek debt relief and counselling. This may help you get your finances back on track.

If you have some time to sell

If you have a few months available to sell your car, opt to sell it privately or through a dealership, rather than approaching a cash for cars company. This will give you the best chance of getting a good price.

4. Choose your provider wisely

Particularly when it comes to pawning your car, make sure you deal with a reputable loan provider.

Filter out any providers that aren’t accredited by the National Credit Regulator (NCR). NCR accredited companies are expected to adhere to the fair business practices outlined in the National Credit Act. Failing to do so can result in loss of accreditation and investigation by the authorities.

5. Steer clear of pawn and drive schemes

Pawn and drive schemes sound too good to be true because they are.

Pawn and drive companies usually require you to transfer ownership of your vehicle to them, and then rent the vehicle back to you at exorbitant rates.

At the end of the loan period, you’ll then have to buy your car back.

If you plan to pawn your car, rather pawn it at a reputable car loan provider and rent a vehicle for the duration of the loan period.

6. Keep your car in good condition

Irrespective of what cash for car deal you go for, you’ll get better value on your car if it’s in good condition.

Ensure that you address chips, scratches and dents as soon as they occur, stick to your vehicle’s recommended service schedule and keep a record of all servicing and maintenance.

Masterparts stocks a wide variety of spares and parts for all major vehicle manufacturers, allowing you to keep your car in optimal condition without breaking the bank.

At Masterparts, we pride ourselves on offering the widest possible selection of auto parts online and off. Contact us if there’s a part you need and we’ll be happy to help.

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