Logbook Loans Explained

Logbook loans may be popular not to mention that they are easy to avail but is it really the right option for your needs and circumstance? To find out if it's the quick fix answer to your money troubles, below is a guide that explains what and how the financial product works including the possible risks.

What is a Logbook Loan?

A logbook loan is the type of personal loan you apply for if you don't own a home but you have a car. If you have bad credit and have been refused a standard loan from banks then a logbook loan makes an ideal solution to your immediate financial problems, needs or investments.
Put simply, logbook loans are short-term secured personal loans which require a legally owned vehicle to serve as security or collateral. Click here for an even closer perusal of logbook loans.

How Much and How Long?

Whether you need £500 for overdue bills, £5,000 for a new car purchase or £50,000 for a business start-up, a logbook loan can meet your needs to a tee. Unlike other personal loans online, logbook loans offer a more flexible amount and term. You can borrow from £500 up to £50,000 which you can repay for 3 months or up to 5 years.

What are the Requirements?

One of the main advantages of logbook loans is that it requires only the most basic requirements. There's no need to bother with a lot of documents or wait for days for approval. As long as you are of legal age, a resident of UK and you own a car that is free of financing, you are welcome to apply for a logbook loan.
For the documents, you'll just need to have the following ready before applying to expedite the process further:

How much is the Interest Rate?

When it comes to cost, logbook loans are quite controversial because of its relatively high interest rates. The average APR or annual percentage rate today is at around 400%. As more lenders pop up online, however, the competition also has gotten stiffer forcing some to lower their rates.
Take for instance Auto Advance which provides logbook loans at a Representative APR of 300%. If you wish to borrow £1,000 payable in 12 months at a fixed rate of 96% per annum, you will end up repaying approximately £163 per month or £1,960 in total.

What are the Possible Risks?

Because of the high interest rates, one of the biggest risks borrowers face when applying for a logbook loan is the danger of getting into more debt. In case you can't pay up, the interest may pile up not to mention that other fees such as late payments also add up to the total cost of the loan.
Another great risk with logbook loans is the danger of repossession. This only happens when you miss several repayments or do not respond to debt collector or new arrangement. To avoid this from ever happening, it's best to borrow only what you need and what you can afford.

Should you go for it?

Borrowing money has never been easier. Today, you can just go online, find a lender, apply and get approved without leaving home. But just the same, borrowing money should be carefully planned. You should only go for after exhausting other cheaper alternatives.