Home > Blog Posts > Pawning Your Car Versus Using Your Car As Security For A Loan
Pawning Your Car Versus Using Your Car As Security For A Loan
June 17, 2019●
7 minute read●
There’s a lot of confusion about the difference between a pawn loan or pawning your vehicle and using your car as security or collateral for a loan. We explore the key differences here.
What Is Pawning Your Car?
A pawn is money you receive against the value of your property. This isn’t the same as using your car as security. It also doesn’t have to be a car, but this is a commonly pawned item. When you pawn a vehicle, you can opt to get the vehicle back after paying off your loan, or, if you default on the loan, you will not receive the item back. When you agree to pawn an item, you agree to the fact that the asset belongs to the pawnbroker if you do not meet the terms of the contract.
Pawning an item like a car could get you fast, easy, and accessible cash. However, it is essential to remember that pawnbrokers do not have to abide by the same code of responsible lending that regular lenders do. The upside to less vigilant regulation is there are fewer requirements to meet to get a pawn loan against your car. The downside is if you do default on the loan, your asset will often immediately become the property of the pawnbroker.
Often, people will enter pawning agreements when they may have intended to sell the item anyway.
Can I Drive My Car If I Pawn It?
Wondering whether a pawnbroker will allow you to drive your car whilst it is being used against a loan? Unfortunately, we cannot speak for all pawnbrokers as this is usually at their discretion. However, many pawnbrokers on the market will allow you to drive your car whilst using it against a fast cash loan.
Worried that your car might not be worth much? Some pawnshops might even lend you money against car parts. So, if your vehicle is a bit of a lemon, that doesn’t necessarily mean you won’t get anything for it. As all pawnbrokers are very different, it is usually best to look into their terms and conditions to find out what you could be eligible for.
What Is A Secured Loan and How Does Using Your Car as Security Work?
A secured loan is where the borrower pledges an asset as collateral against the loan. This becomes a secured debt owed to the creditor.
If you are using your car as security for a loan from a lender, repossession of your car will often be the last resort. Many lenders will do their best to explore other avenues, such as restructuring your loan before they take your car completely. Generally, there is a lot more regulation surrounding small and medium-sized lenders of secured loans.
A secured loan is often considered a much safer option to a pawn loan. However, in some cases, it may take a little longer to get the cash. If you prefer to err on the side of caution, and have been searching the web for ‘using your car as security’, this method may be the best way to get the cash you need with reduced risk.
Using Your Car as Security and Wondering if You Can Still Drive It?
If you’ve been actively researching using your car as security on a loan, you’re aware there are a variety of lenders. Each of these lenders will have different terms and rules. If you’re wondering whether or not you will be able to drive it while using your car as security against a loan, the answer is usually ‘yes’. We cannot speak for all lenders; however, this is typically the rule of thumb. If you are unsure, however, it is essential to check with the individual lender.
Jacaranda Finance Australia
Jacaranda Finance is not a pawnbroker and therefore, will not offer instant cash against a vehicle. That is not to say using your car as security is not an option. It is. We offer secured small loans that could be approved on the same day*, depending on when you apply or your financial situation. We are all about providing convenience without compromising on our commitment to responsible lending. At Jacaranda, our whole application process is 100% online. That means you could apply for a secured loan of up to $10,000 from the comfort of your own home – you could even fill out an application on your smartphone.
Jacaranda Finance is proud of the fact that we give all Aussies a fair go at a personal loan online. We do our best to match you with a loan product that is right for your situation. Often, using a car as collateral can be a safe and efficient method of getting the cash you need. However, you can rest easy knowing that we will do our best never to lend any of our customers an amount of money we believe they will not be able to repay.
Will Jacaranda Take Your Car?
Unlike a pawnbroker, Jacaranda Finance does not have the right to immediately take ownership of your car if repayments are missed or failed. As we are a responsible lender, our team must issue a series of notices to warn of a defaulted payment. Our main objective is to help you meet your loan repayments and not have to repossess your assets.
Jacaranda would prefer to offer you other options of repayment or restructure your loan to have the defaults settled. The only time we will take your car is if all other avenues have been exhausted. Our team understands that sometimes in life, things don’t go exactly to plan; we will always do our best to assist you in whatever way possible.
Am I eligible, and what do I need to apply?
At Jacaranda, we like to keep our eligibility criteria somewhat flexible, so all Aussies have a fair go at a loan. Here are the requirements we need our applicants to meet:
- All applicants must be over the age of 18;
- We require that all applicants have had a regular income into an account of their own for the last 3-months;
- Jacaranda requires that all applicants be Australian citizens or permanent residents;
- All applicants must have an active email address and mobile number;
- 100 points of ID will be required for the application; and
- Online banking details must be provided as a part of the application.
When you apply for a secured loan with Jacaranda Finance, we do our best to get back to you with an outcome as soon as possible. If you apply during regular AEST business hours, our team will endeavour to get back to you within 60-minutes. If approved and you accept your digital contract, you could have the money in your account in 60 seconds*.
It is important to remember, however, that inter-bank transfer times can affect the speed at which the cash hits your account. If you are considering an application with Jacaranda, it is a good idea to have all of your personal documentation handy as this will speed up the process considerably.
At Jacaranda Finance, we know our business would not exist without our customers. That’s why we value fantastic customer service and responsible lending. Our team is always here to assist you. Since we are 100% online, you can flick us a message at any time, and we will do our best to get back to you as soon as possible!
How To Apply
If you’re ready to apply for one of our car loans, here’s what you’ll need to do:
If you’re ready to start your application, scroll up and use our loan calculator to select an amount and repayment period. Hit ‘apply now’ to begin our 100% online application form.
Our online application form could only take you a few minutes to complete. Once this is completed, all that is left to do is relax! Our team will take it from there. If you have applied during AEST business hours, we will do our best to get back to you with an outcome within 60-minutes.
If your application is successful, our team will be in touch. We will send over a digital contract for you to review and sign. It is essential to make yourself aware of any payments you could incur for failed payment – Jacaranda Finance will always make these clear in your agreement.
Once we receive your signed contract, our team will transfer the funds to your account. It is important to remember that inter-bank transfer times can affect how quickly you receive the cash.
Ready to Apply?
Scroll up, and you’ll find our handy loan calculator. Select how much you wish to borrow and for how long, then when you’re happy with your proposed terms, click the Apply Now button. From there, we will do everything we can to help you out!
Don’t wait, get started today!
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