How Logbook Loans Work?
In the recent years, logbook loans have emerged as one of the most popular loans for bad credit in the UK, being dubbed as a quick fix financial product for those with tight cash needs. However, they are also being criticised by many experts due to the high costs and risks associated with them. Below is a quick logbook loan guide for anyone considering this financial product.
Who are Logbook Loans for?
If you have had credit problems in the past and cannot qualify for other loans, you can benefit from a logbook loan’s no credit check scheme. All it takes is a vehicle that is free or almost free of financing under your name, proof of income, address, and the vehicle’s logbook in order to get started.
Where to Apply?
While logbook loans are also available on the high street, you’ll get more plenty of choices online. Because of the increasing demands for bad credit loans over the years, hundreds of lenders are competing for customers like you who want a quick, hassle-free application. There’s also an added benefit of applying online as you may just find cheaper deals compared to products offered on the high street. Regardless, it’s important to choose a lender with a proven track record.
How Much does it Cost?
Though cheaper than payday loans, logbook loan rates are still expensive, and can reach up to 400% APR. Be very careful in choosing lenders that claim to offer cheaper rates, as there could be hidden charges associated with your loan. In a nutshell, logbook loans can come in skyrocketing prices for a short-term loan, so make sure you fully understand the risks.
How to Pay the Loan Back?
Most logbook loans last for up to 78 weeks due to their short term nature, but these days, many lenders are offering more flexible options to suit the client’s affordability, including loans that last for up to 3 years. You may also choose the frequency of your repayments, whether you want to make payments weekly or monthly. It is important that you talk to your lender so that you can both arrange a repayment scheme that would be easy and affordable to you.
How it Affects Your Credit Score?
While there may be no credit checks to go through, a logbook loan is just like an ordinary loan that would appear on your credit history. Having a logbook loan is a great opportunity to rebuild your credit if you can stick to your due dates, but it can also work as a double-edged sword and pull your credit down further if you miss your repayments.
What’s the Catch?
The most important thing to remember with a logbook loan is that it is backed up by your own vehicle. While you may technically still drive it even while the loan is in force, you cannot ignore the fact that the bill of sale was signed and transferred to your lender. Missing your repayments could mean losing your vehicle for good, so it’s important that you are aware of the risks involved.