Asset-based Loans Versus Bank Loans in Botswana

bank loans asset based loans

Unexpected expenses are a common occurrence, whether it’s a hefty doctor’s bill, car repairs or even a burst geyser. When these types of costs crop up, most people head to the bank to try and secure a personal loan. However, a traditional bank loan isn’t always the best way to go.

Credit in Botswana

Botswana has a reputation for being a credit-driven society, with many Batswana struggling under massive household debt. In 2014, our total personal household debt was measured at a staggering P23.4 billion, and it has been on the increase ever since.

This upward trend in personal debt has caused banks to tighten the criteria for approving personal loans. It also means a high percentage of Batswana will battle to secure a traditional loan because they have poor credit histories.

It can be tempting to opt for a loan from an unregulated microlender or loan shark, especially prevalent in the country due to the lack of a fully empowered national credit regulator. However, the risks and associated costs can be high.

A newer and safer short-term finance option to consider is an asset-based short-term loan. Below we compare traditional bank loans and asset-based loans, and their pros and cons.

Bank loans

While banks are the more traditional way to secure finance, there are a number of disadvantages to this type of loan because they have much stricter criteria.

Steady income

Most banks will require you to have a steady monthly income in order to approve a loan. If your income fluctuates because you are contract or freelance worker, you’ll have a harder time getting approved.

Credit history

The bank is likely to check your credit history to see if you have ever defaulted on a loan before. If you have a negative history or you’re blacklisted, it’s highly unlikely that they will approve your loan.

Slow turnaround

Bank loans aren’t quick; they can take a week or more to get approved. If you have a personal bank account with a different bank, this can further delay or complicate the process.


There is a lot more paperwork involved when securing a traditional bank loan. Most banks will ask for three months’ worth of bank statements or payslips, as well as copies of your ID and a proof of residence at minimum.

Asset-based loans

In the case of an asset-based loan, you do need to surrender an asset of value, such as a vehicle, luxury watch or item of jewellery, for the duration of the loan. If you fail to repay the loan amount and agreed interest, it’s possible that your asset could be sold.

However, because they have more flexible criteria, asset-based loans offer a number of advantages over bank loans.

No credit history required

These loans are based on the value of a paid-off asset, such as a vehicle, luxury watch or jewellery. Your credit history is therefore irrelevant to the value of the loan.

Immediate access to funds

Unlike bank loans, asset-based loans tend to have a turnaround time of less than 24-hours. You can usually expect a direct deposit into your bank account within this time frame.

No minimum income

You don’t have to earn over a certain amount every month in order to qualify for an asset-based loan. You also don’t need to have a steady income. Even being unemployed doesn’t automatically make you ineligible.

No risk to other assets

Only the asset you provide as collateral for the loan is at risk in the event that you don’t repay the loan.

In contrast, defaulting on a traditional bank loan could put your and your family’s possessions at risk. If a creditor sues you and wins a court judgement against you, the creditor may be authorised to seize your property and income – including assets that weren’t specifically named as collateral for the loan.

With an asset-based loan, the asset you provide is held in a secure, access-controlled facility. You don’t lose ownership of the asset during this time and, once you’ve repaid the loan, the asset is returned to you in the same condition you left it.

Asset-based loans with lamna in Botswana

At lamna Botswana, we offer fast, discreet, asset-based loans against the value of a wide range of assets, from luxury watches and jewellery to vehicles or artwork.

There are no hidden costs, our interest rates are competitive and the application process is simple and transparent.

For more information about using an asset to secure a short-term loan in Botswana, contact us on 71 388 088 or simply complete and submit our online application form.


Complete our Online Application Form