13th Feb, 2023
Are you looking to get a loan but don’t know where to start? The process of securing a loan gets easier if you are willing to put up collateral against it. Anything that possesses a higher market value can act as collateral. Your car, your home, a limited edition watch, the choice is yours but, let’s first begin by learning what exactly a collateral loan is.
A collateral loan is a secured loan where any valuable asset of the borrower is kept as a guarantee of a loan until the loan is paid back in full. Simply put, it’s an asset-based dealing where some valuable item/s is kept as a security of loan money.
There are many types of collateral that can be used to secure a loan, including:
Simply put, anything of significant market value can work. It’s a win-win situation for both the lender and the borrower. If the borrower fails to pay, the collateral is used as compensation. On the other side, borrowers can lend higher amounts of money with relatively lower interest rates, when compared to other financial institutions.
There are some things that should be kept in mind for collateral loans to work; you must completely own the asset that you’ve put up as collateral to secure the loan. If there’s still an instalment left to pay or a remaining balance from another lending institution on the asset, then it will not be eligible.
Secondly, you need to find a lender that offers collateral loans like Instant Cash SA. We offer collateral loans on cars, trucks, bikes, caravans and earth-moving equipment. Once the lender approves your asset as collateral, the market value of your asset is calculated. The size of the loan will then be calculated on the market worth of your asset. The payment terms and interest rates are further calculated on the market worth of the asset.
The asset is then ceded to the lender until the loan is repaid in full, whereby the asset is then returned to its original owner.
When you default on your bank loans or credit card payments, it shows up on your credit history and profile when applying for a traditional loan. Defaulting on payments affects your overall credit history, with the most severe consequence of being blacklisted. This status will limit your potential to be awarded a loan.
As collateral loans are asset-based, credit score checks and defaults on previous loans, even if you are blacklisted, aren't taken into account.
If you are blacklisted, the collateral loan is secured by the asset and therefore you can still apply and be awarded the collateral loan.
There are many registered financial institutions that will offer a collateral loan in South Africa. However, the process can be timely and tedious, especially because the asset offered as collateral in the loan agreement, needs to be assessed and market value established, before the loan will be awarded.
Instant Cash SA offers a seamless and quick process, much faster than any other collateral loan financial service provider. We offer multiple contact options, an easy assessment process and fast document draw-ups.
Instant Cash SA is your one-stop solution for your collateral loan needs. We are client-centric, focus on service excellence and dependability and operate with financial prudence. We go the extra mile to ensure our clients overcome their financial obstacles.
Our loan repayment period runs for a minimum of 61 days and a maximum of 6 months. We also offer special interest rates based on the collateral value as well as return customers.
With countless offers and the best interest rates, Instant Cash SA is here to support your personal financial goals, business expansions and more.
Contact us today to help find the solution to all your collateral loan requirements!