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Do you need quick cash but has bad credit to worry about?

Advantages & Disadvantages of a Logbook Loan

If you’re struggling to get approved for a personal loan because of bad credit, applying for a logbook loan is one option you might want to consider. Many high street lenders offer the financial product. You can also avail it online if you’re looking for even more convenience. But like any other types of personal loans, logbook loans have its pros and cons. It’s imperative to understand them before signing any deal.

Advantages of a Logbook Loan

Starting with the advantages, logbook loans can offer you the following:

Fast processing - Advertised with the promise of fast cash, logbook loans are very attractive to borrowers with bad credit because it’s not only easier to avail but you can get approved within the same day. Some lenders are now offering same day approval granted that you meet the eligibility criteria.

No credit check - Another chief advantage with logbook loans is the fact that there’s no credit check involved. Whether you have a bad credit score because of missed payments or defaults, they don’t really matter. As long as you have a vehicle you can use as collateral, you can avail a logbook loan fast.

Large loan amounts - With your car used as collateral, borrowers are able to avail larger loan amounts than what unsecured loans offer. You can borrow anywhere from £500 to £50,000 you can repay from 12 months up to 36 months. In general, lenders let you borrow up to half the value of your vehicle. Some lenders even let you borrow up to 70% of the car’s trade value.

Disadvantages of a Logbook Loan

While easy to avail and perfect for people with bad credit, logbook loans are not without its disadvantages. Here are two disadvantages you should know about:

High interest rates - One of the reasons why many experts discourage borrowers from getting a logbook loan is because of the high interest rates. On average, the financial product comes with a representative APR of 400%. That already covers the cost of the loan’s interest, processing fees and related charges in annual basis. In any case, the loan is still deemed incredibly expensive. Fortunately, stiff competition has forced many lenders to lower the representative APR. It is now possible to avail the loan at 200% APR or even less.

Repossession - Since logbook loans are secured on your vehicle, there’s always the risk of losing your car in case you are unable to keep up with the repayments. But contrary to popular belief, repossession is often the lender’s last resort. When a borrow miss payments, a debt collector will be assigned to you. Some lenders may even be open to make new arraignments provided that you speak with them if you suspect that you can’t repay the loan. After several attempts and you can’t still repay the loan, this is when lenders recover your vehicle as per the “bill of sale” and credit agreements.

Should You Take a Logbook Loan?

Considering the pros and cons, it is clear that logbook loans are not for everyone. In fact, it is best to consider the financial product as a last resort. It can be costly and should be considered carefully.

You should only consider a logbook loan when you’ve exhausted other low cost alternatives. It is also an ideal personal loan option if you’ve been refused a loan elsewhere and you need cash fast to take care of financial emergencies. In any case, make sure to borrow money responsibly.

How to Find Cheap Logbook Loans

Finding affordable logbook loans is easier said than done. While there are more and more lenders offering the financial product, the cheapest advertised logbook loan doesn’t always mean it’s the best deal available in the market. You need to be smarter than your lender if you want to avail a deal that does not only suit your needs but is also friendly to your budget. To help you along, here are things you can do:

1. Shop Around

Treat looking for the best logbook loan deal like you were shopping for the best clothes or shoes. This means you’ll need to shop around and compare one deal after another to find the perfect option suitable for your personal circumstance. When shopping around, make sure to compare key factors such as APR, loan amounts, loan repayment terms, etc. You can check out the best loan deals available today at http://paydayloans.money.co.uk/logbook-loans.htm.

2. Understand Representative APR

One of the key factors you need to focus extra attention on is the Representative APR. As you compare logbook loan deals, you’ll see that these deals are advertised with Representative APR attached to them. APR or the annual percentage rate is what will tell about the rough estimate of the loan’s cost per year including interest rate, processing fees and related charges.

3. Ask Around

You’d also want to ask around. If you know someone who have taken out a logbook loan before then seek for his or her recommendation. If they were satisfied with their lender, chances are high that you’ve already found your lender.

4. Ask About Hidden Fees

And don’t forget to ask about hidden fees. You can read more details on hidden fees in the fine print but you can also ask your lender directly. By investigating hidden fees, you are essentially ensuring that your lender will not bleed you out through unnecessary charges and fees.