Are Logbook Loans Really Costly?
There's no denying that logbook loans are really popular in UK. This is attributable to the premise that it's easy and fast to avail. At the same, the financial product is also drawing criticisms because of its high cost. If other types of loans such as homeowner loans come with an APR of 5 to 8%, logbook loans are pretty costly at 400% APR on average.
Though the percentages clearly prove the stark difference in interest rates, this does not necessarily mean that logbook loans are costly per se. Yes, it is more expensive than conventional choices but it doesn't have to be a disadvantage if you know how to manage your debt and repayment set-up.
Logbook loans are also meant for short term and quick fix solutions only. Unlike homeowner loans which typically last for 25 years, logbook loan terms only range from 3 months to 3 years or 5 years maximum. This means you are only in debt for a shorter period of time. Furthermore, the loan amount is smaller hence an ideal solution for immediate and pressing money troubles.
At the end of the day, whether you applied for a logbook loan or a homeowner loan, the overall cost will depend on how suitable the product is for your situation. As much as possible, it's wise to steer clear from loans but when the current situation requires it, it's just important to keep in mind the pros and cons to avoid the consequences.
To conclude, logbook loans, in reality, are costly if you're only looking at the APR. But any responsible borrower can get around that if you commit to use the money wisely and make repayments regularly.