CCR Magazine

You are here  :Home arrow News arrow Concern about rising number of consumers pawning their motor vehicles to obtain loans
Contact Us Newsletter Signup RSS Feeds

Latest News Headlines

Headlines

 
Commercial Credit News

Headlines

 
Concern about rising number of consumers pawning their motor vehicles to obtain loans PDF Print E-mail
Thursday, 09 March 2017
The National Credit Regulator (NCR) is concerned about the rising number of consumers who pawn their motor vehicles in order to obtain loans.  

“While pawning of assets for loans is allowed under the National Credit Act (NCA), the NCR would like to caution consumers against pawning their motor vehicles due to the high risk that they could lose them to pawn brokers if they are unable to repay the loans within the agreed time,” says Nthupang Magolego, Senior Legal Advisor at the NCR.

The NCA allows the pawn broker to keep the consumer’s pawned asset as security and to return the asset to the consumer once the loan is repaid. If the loan is not repaid, the pawn broker can sell the asset and use the proceeds of the sale to settle the loan.

“Consumers are advised to read the pawn broker’s credit agreement carefully to avoid signing agreements that transfer ownership of their pawned assets to pawn brokers before they default. The pawned asset only serves as security for the loan and can only be sold if the consumer has not paid back the loan,” Magolego says.

The pawn broker keeps the pawned asset at its own risk.

“Over and above the loan that consumers must pay back, some pawn brokers also charge consumers illegal charges such as storage charges, resulting in very expensive loans,” Magolego added.

A pawn transaction is a short-term credit transaction under the NCA. The interest which the pawn broker can charge is limited to 5% per month on the first loan and 3% per month on subsequent loans in one calendar year.

“Pawning assets for loans should ideally be used for small amounts of loans, where small assets such as cell phones, laptops or similar assets are pawned,” concludes Magolego.
 

 Forums International Ltd

Forums International Ltd

 Attendance at your first meeting is free of charge, and please quote reference 'CCR2016' to receive the special 10% discount off of your first annual subscription.

Find out more here.

latest issue

CCR Cover

The latest edition of CCR Magazine, the leading editorial publication in the UK credit industry, is out.

Read the latest issue online

subscriptions

CCR is the premier magazine for consumer and credit professionals. It provides an independent voice to the industry, breaking major news stories and running in-depth features.

As a magazine, it works with and campaigns on behalf of the credit industry to promote its importance as a centre of potential profit and business development to the wider business world.

Subscribe to CCR Magazine

CCR World Magazine


 

Providing information and analysis for thousands of senior credit professionals worldwide, every quarter.

Find out more

GTS Media Ltd
81 Cambridge Road
Southend-on-Sea
Essex
SS1 1EP

Registered in England No: 05483197