Weighing the Pros and Cons of Logbook Loans
Debts can be good or bad. What it will be for you will depend on how responsible you are with repayments. To ensure, therefore, that your logbook loan will count, you need to weigh in the pros and cons before getting one. That way, you'll know what you're getting into and you are more prepared to avoid the consequences.
What are the Pros?
1. Easy to Avail - One of the best advantages of logbook loans is its availability. Now more than ever, lenders are proliferating online making it easier for borrowers to get a loan practically 24/7.
2. Fast Approval - Then there's the ultra fast approval. If you apply today, you can expect a response within a couple of hours, sometimes even instantly. Within the same, borrowers will receive the money. Now, borrowing doesn't get any faster than that.
3. Flexible Amount and Terms - Unlike unsecured loans, logbook loans are secured against your car which means loan amount is more flexible as well as the term. In general, you can borrow from £500 to £50,000 depending on the official trade value of your vehicle. Terms can start from 3 months up to 5 years.
4. No Credit Check - For those with bad credit, logbook loans are good news. Most lenders offering the financial product do not require credit checks. This means almost 100% approval rate given of course that you met the basic requirements.
What are the Cons?
1. High Interest Rates - While widely popular, logbook loans also attract major controversies due to its high interest rates. Average APR for the loan is about 400% or more. It's definitely higher than what conventional loans costs but the high APR is also justified by the lenders taking greater risks on borrowers especially those with bad credit.
2. Debt Traps - Aside from cost, there's also the possibility of putting yourself in a debt trap. Since logbook loans are easy money, it's convenient for borrowers to get a loan which may lead to more problems if you're not a responsible payer.
3. Repossession - Of all the cons, repossession is the biggest disadvantage. If a borrower fails to make repayments, the lender has the right to repossess the vehicle and even sell it as payment for your outstanding debt. To help you avoid car repossession, click here for some guidelines and tips.