The Risks of a Logbook Loan

Logbook loans are appealing because it's currently one of the most convenient ways to obtain funding for whatever purpose you have in mind. Maybe you want to consolidate debt, start a new business or renovate your home. In any case, a logbook loan can provide you up to £50,000 to meet your needs perfectly.
In exchange for the fast processing, wide availability and flexible terms, however, are the personal loan's risks. If you're thinking of taking out a logbook loan anytime soon, it pays to take a close look at the risks you will and may face along the way.

High Interest Rate

There are two known risks that tick critics and one is the high interest rates attached to logbook loans. The APR or annual percentage rate for the product averages at around 400%, a steep price to pay indeed for a quick fix solution. Even if you're a responsible borrower who’s paying your dues on time, you are still likely to end up paying more in interest in the end.
The high interest rate, however, is justified by the logbook loan lender's taking risk on borrowers with bad credit. With banks turning down applications due to bad credit, online lenders stepped up to the plate by offering a type of secured personal loan where even those with the worst bad credit scores can still apply.
Now, it's just up to you to weigh both sides of the spectrum with a reasonable mind. If the advantages outweigh the disadvantage than that's a good sign to go for it.

Car Repossession

As the name suggests, logbook loans are secured against vehicles which means borrowing money this way puts your car at risk for repossession. Critics again are bombarding the financial product with criticism because of what they deem as unfair terms.
When approved for a logbook loan, your lender gets to keep your V5 or logbook document while you keep your car. You can borrow up to 50% of your car's official trade value which is determined by a loan officer. Depending on your preference or what you can afford, you can set the terms from 3 months up to 5 years. Repayment is then required either weekly or monthly.
If you're a good payer, you shouldn't worry about repossession. If you miss several repayments, however, then repossession is looming. Backed with a bill of sale, lenders can repossess and sell your car as their means to cover your outstanding balance. In the event that the car sale did not cover the cost, you will still have to pay the difference.