AutoCapital plans vehicle-backed loans

AutoCapital Namibia is developing a financing model that would allow business owners to borrow against fully owned vehicles, with its regulatory application still under consideration.

The proposed service would allow entrepreneurs and small businesses to use their vehicles as collateral for short-term finance, potentially offering an alternative to conventional lending for those who struggle to qualify for bank loans.

AutoCapital chief executive Vagan Ovsepyan said the model was aimed at small and medium-sized enterprises (SMEs) and individuals seeking business finance but facing barriers to traditional credit.

The company presented its proposal at the Namibia Financial Institutions Supervisory Authority’s (Namfisa) FinTech Square in Windhoek on 14 October.

Under the proposed model, vehicles would be assessed through digital tools and physical inspections, with financing decisions informed by vehicle valuations and ownership verification.

However, key details remain unclear, including the interest rates and fees borrowers would pay, repayment periods, and whether customers would retain the use of their vehicles while repaying their loans.

The consequences of default, including whether vehicles could be repossessed, would also be important considerations for prospective borrowers.

Ovsepyan said the company’s application to Namfisa’s regulatory sandbox remained under consideration, although development of the platform was at an advanced stage.

The sandbox provides a framework for testing financial innovations under regulatory oversight. The outcome of AutoCapital’s application will help clarify the conditions under which its proposed service could operate.

The company is also developing security features for its digital platform, including PIN verification and alerts for potentially fraudulent account activity, chief technology officer Werner Alweendo said.

The model seeks to address a financing challenge for entrepreneurs who own valuable assets but cannot readily access conventional credit. Its viability will depend on the final lending terms, safeguards for borrowers and the regulatory requirements governing its operation.