Are you struggling to get a loan because of your poor credit? Do you need cash to take care of an emergency? The logbook loan might just be perfect for you. While it is easy to secure a logbook loan, it is important to consider the pros and cons before making that final decision.
The advantages of logbook loans
There are several merits here. First is the availability. There are many loan service providers that offer logbook loans all around the country, with some even offering the service online. This means one does not necessarily have to visit the physical office. Furthermore, they are typically processed very fast and are ideal for the individual needing quick cash. This is what makes them particularly attractive to the individuals with poor credit. Some loan providers even offer same day approval.
No credit checks
This is perhaps the biggest advantage; there are no credit checks for logbook loans. Poor credit can happen to anyone and can be because of defaulted or missed payments. As long as you have a vehicle that can be used as collateral, then you will get your logbook loan very fast.
With your car offered as collateral, you will have the opportunity with a logbook loan to borrow larger amounts than your typical unsecured loan. Amounts borrowed range from £500 to £50,000, with repayment periods of between 12 and 36 months. The rule of thumb for most borrowers is half the value of the vehicle, but some can go as far as 70 percent of the vehicle’s value.
Logbook loans involve a high level of risk for the lender, and this is why they often have high interest rates. The average Annual Percentage Rate (APR) of the logbook loan is 400 percent, which will cover the interest, processing fees and other related charges in an annual basis. For the borrower, the reprieve is that competition has forced some of these rates down to an APR of about 200 percent.
Possibility of car repossession
Another disadvantage one must be aware of going in is the possibility of repossession. Logbook loans are secured by the vehicle, and there is always the possibility of losing the vehicle should one default. However, with a good lender, you will have the opportunity to make alternate arrangements, provided communication is given as early as possible. Repossession normally only happens if after several attempts at an alternative payment system, one still cannot pay.
Before going for a logbook loan, it is important to therefore shop around with the advantages and disadvantages in mind. Think about your situation and only go for the lender that has the best terms. Treat the loan process just like any other shopping process and compare the various deals before making a decision. Remember, every service provider will present themselves as the best; be very wary and make sure to look at the fine print of the deal. Further, it helps to be more familiar with such terminology as the APR, hidden fees and interest rates. With this information, the process of getting a logbook loan will be very smooth.