Pros and Cons of Logbook Loans
Unfortunately there is no denying that logbook loans have gained increasing popularity and uptake over the past few years. More and more borrowers are turning to the loan type for quick fix solutions to their cash problems. But at the same time, logbook loans have also gained a lot of bad publicity especially from financial experts. As the loans carry high interest rates, experts warn borrowers from getting one. Others recommend extra caution. Below are examples of both sides of the argument for Logbook Loans:
Logbook Loans “The Pros”
Logbook loans tend to be more popular for people with bad credit because of the following advantages:
- The offering of online logbook loan deals means that the loan product is very accessible. To avail the loan, all you need to do is make sure you are eligible. You can then apply online and expect approval confirmation quickly. Before applying, however, it is imperative to do your homework. Research your lenders and make sure to pick one with a good reputation.
- Provided that you meet the requirements and have the necessary documents handy, you can expect for fast approval. Some lenders are even promising same day approval services. With a lot of competition in the lending industry, fast approval and convenience are one of a lenders ways to convince borrowers to sign up.
Flexible Loan Amount
- Since logbook loans are secured against a vehicle, the loan amount is more flexible that what unsecured loans such as payday loans offers. With a logbook loan, you are welcome to borrow from £500 up to £50,000. It also means that logbook loans can meet a wider range of financial needs. Whether it’s for home renovation, vacation or a medical emergency, logbook loans make an ideal financial solution.
Flexible Loan Term
- Also equally flexible as the loan amount is the repayment term for logbook loans. You can opt between 3 months up to 3 years of loan term depending on what you can afford to repay per month. The loan product gives you more freedom to tailor your loan set-up according to your personal circumstance so as to avoid any costly defaulting.
No Credit Check
- Of the logbook loan advantages, the best on the list is surely the no credit check policy. While other personal loans require you to have good credit, logbook loans do not mind your credit score. As long as you have a car to serve as collateral, you can take advantage of the loan and therefore meet any pressing financial need.
Logbook Loans “The Cons”
But logbook loans are not without its disadvantages. Three of the common cons you should know about are the following:
High Interest Rates
- One of the most common complaints that both experts and borrowers alike have with logbook loans is the high interest rate. Compared with traditional personal loans, logbook loans charge hefty and sometimes excessive interest rate. The average Representative APR for the loan product is at about 400%, which is a great deal more than loan options for people with good credit.
- Then there's always the debt trap problem. If you're a borrower with bad credit, it is very easy to fall prey on the cycle of borrowing money to meet your array of financial needs. If this happens you stand a chance of putting your credit score at an even greater risk of being bad. When you borrow money, it is very important to take extra caution. Borrow only what you need and make sure to repay the loan back on time.
Repossession of your Vehicle
- Like with any secured personal loans, the worst thing that can happen to you is repossession in addition to a huge hit on your credit score. When you signed the debt agreement, you are essentially handing over temporary ownership to your lender. This ultimately means that if the lender has the bill of sale to your car, they have the right to repossess your vehicle as per the agreement. Repossession is usually the last resort and it happens when you missed payments for a number of successive months. This would be after your lender contacted you and you failed to make new arrangements.
- If you were to default on any repayments the lender has the right to charge you for the inconvenience of missed monies owed in the form of financial penalties. These will be found in the small print so read this before entering into a logbook Loan to understand the implications of defaulting on a payment.