How Logbook Loan Works
Despite the controversies, there is no question as to the ever growing popularity of logbook loans. Logbook loans are personal loans people with bad credit can quickly and easily avail. All you need is a vehicle and you can avail loans from £500 up to £50,000. Borrowing money doesn’t get better than with logbook loans. But there’s more to it than quick cash. If you’re planning to secure a loan against your car, it’s imperative to know how the product works to avoid the risks. So how exactly do logbook loans work?
Given that logbook loans are secured personal loans, you need collateral to avail the financial product. This means you need a vehicle that meets your lender’s criteria to be able to take out a logbook loan. Your lender will require for you to hand over your V5 document along with other documents such as MOT certificate and insurance details.
With logbook loans, you still get to keep and use the car but ownership is temporary handed over to your lender. This means that you could lose your car in case you are unable to repay the personal loan as per the contract agreement.
Other than the risk of repossession, you also have to think about cost. Logbook loans are easy to avail but there’s a catchy. The financial product comes with hefty interest rates. In fact, the representative APR for logbook loans are many times more than what a traditional personal loan costs.
Currently, the representative APR for logbook loan is 400% on average. Some lenders offer less than that but you need to be wary of hidden fees. Make sure you always read the fine print and ask lenders key questions before signing any deal.
When borrowed with caution, logbook loans offer a quick fix solution to a wide range of personal needs. Just keep in mind to borrow only what you need and what you can afford every time.