24 Nov 5 Steps to Pay off Your Loan when you Pawn your Car
If you have decided to pawn your car in order to raise cash for a certain purposes, it’s important to have a plan in place that will allow you to pay off that loan and get your car back. You may be asking yourself how in fact you can do this as not only will you be paying back the loan but also the interest that it accrues. Here are 5 steps you can take to help you pay off your loan:
Steps to Pawn your Car and Repay the Loan
1. Write it Down
The first step to take is to write down exactly how much you owe and when you would like to pay it back by. So for example if you have loaned R100,000 at an interest rate of 20% per month and you would like to pay it back within 6 months, then the total repayment amount will be R220,000 before you can get your car back. If this is the case you will need to save or repay R36,666 per month over 6 months in order to get your car back. The longer you take to repay the loan, the more interest you will need to pay. What is important here is that you need to be fully aware of your financial situation in order to take proactive steps.
2. Save where you can
If you are unable to use the above method, make sure that you put away an amount every month that will pay towards getting your car back.
Try to account for all your costs and expenses over the time that you are paying back the loan. If you cannot afford to pay back a portion of your loan that is OK, but make sure that you don’t miss paying the interest every month that your car is with a pawnbroker in order to avoid getting into more debt. Pay the interest rate each month for pawning your car and then also put an amount into savings that you can use to repay the loan.
3. Save wisely
It’s important to try and make the money that you save grow. By putting your money into a savings account with a bank you can be rest assured that it is safe and accessible. Make sure you choose the right savings account for your needs. These can often be classified into 3 groups:
Call Account. With a call account you are able to access your money quickly and “on call”. You may be able to do this online or with a phonecall. The interest rate on a call account is usually the lowest at about 2% and there may be a minimum deposit amount required to keep the account active.
Notice Deposits. A notice deposit account allows you to save money at a higher interest rate. The notice period is the time that it takes from telling the bank you you’re your funds to actually receiving them. Notice periods differ and can be anything from 21 days to 61 days. Generally the longer the notice period, the more interest you can earn.
Fixed Deposit Account. A standard fixed deposit offers a fixed interest rate over the agreed term, which gives you certainty about what you could earn. Today, many banks offer ‘linked deposits’. These are fixed deposits that offer a guaranteed minimum interest rate, but if interest rates increase above that during the term, so does the interest paid to you. You can earn quite reasonable rates of interest on fixed deposits – a recent comparison across banks showed a range from 4.62% to 5.85%.
4. Spend Wisely
Apart from saving wisely it’s also important not to spend money on unnecessary or impulse purchases. If you want a new TV or Lounge Suite wait until you have repaid your loan to the pawn broker and have your car back before making purchases that aren’t critical. This also goes for spending on clothes and holidays.
5. Pay the Interest
If you are unable to pay back the full amount of the loan when you pawn your car in a short period of time then it’s important to remember to pay at least the interest each month. By paying the interest each month you can try to avoid getting yourself into a worse off financial situation. Make it a priority to pay the interest to the pawn broker each month without fail.
Read here about what you need to pawn your car.
In order to pawn your car, you need to find the right Pawn Broker that understands your needs and is willing and able to help you get your car back.
Good Fellows Pawn Brokers are one of South Africa’s leading Pawn Brokers. With starting interest rates from a low 0.7% per day and many years’ experience in helping you get your asset back, Good Fellows Pawn Brokers offers instant cash loans on all assets. Pawn your cars, bikes and vehicles with us. Speak to a friendly consultant at Good Fellows Pawn Brokers today to pawn your car.