No matter how simple and straightforward everything may seem, there are many things you need to take into account when applying for a logbook loan.
Is the Need Urgent?
There could be a hundred reasons why you need cash, but the big question is whether you need the money urgently or not. Because of their nature, logbook loans are pretty much expensive, and it’s very hard to find a lender that will offer you less than 250% APR.
If your credit isn’t that bad, and you can wait for a bit more time, then you’re probably better off requesting for a loan from your bank. But if your credit makes it impossible to qualify, and the money is needed within the same day, then by all means, go ahead and apply for a logbook loan. Please make sure to use the cash wisely though.
Is the Loan Amount Sustainable?
A logbook loan is one of the primary options for people looking to borrow a higher sum of money, because of the equity present in the vehicle. Bear in mind though that a higher loan would mean higher monthly repayments as well, so perform your calculations thoroughly.
Also think about your actual need vs. the amount that you’re eligible to borrow. Don’t maximise the £1,000 limit that you’re allowed if you only need a hundred. A high amount of cash translates to higher interest rates and a longer repayment period, which make the loan more expensive overall. Consider what you really need and what you can afford to pay in your repayments and stick to this amount.
Are the Terms Ideal?
While all logbook loans are similar by nature, different providers offer different terms and policies as well, regarding late payments, repossession of the vehicle, early repayments, and more. Aside from the annual percentage rate, it’s wise checking out the company’s late fees and other charges, even if you were planning to comply on your payment schedule. It’s always better to be prepared rather than fall for any future surprises.
Have You Explored Other Options?
There are many other types of loans designed for borrowers without stellar credit, and while a logbook loan might be a good choice, it may not be “the” right choice for your personal situation, even if you own a vehicle which you can use as collateral. Perhaps you only need a small amount which you can repay immediately and a payday loan should work just fine. Even better, maybe you can borrow from your friends or relatives who won’t be asking for your credit score. A logbook loan may or may not be suitable for different circumstances, so make sure to weigh out your options first.
It’s always important to remember that a logbook loan is expensive, and there may also be additional fees and charges if you don’t meet your repayments on time. Be sure that you know what you’re getting into before trying to secure a loan against your vehicle or any other property.