The easiest way to avoid logbook loan scams is to simply take out any other available loan. If a logbook loan is all you can get, because you are hopelessly in debt and have bad credit, then avoiding being scammed is not impossible. The only thing you will not be able to avoid are the horrendous APR rates, which make you return up to five times what you have borrowed, sometimes even more. There is no reason to enter into such an agreement, unless you are desperate. As usual, desperate people are an easy prey, which is why logbook loans and payday loans exist in the first place.
A little while ago the government promised to ban logbook loans, but as usual in money matters, they sided with the big bucks and against common folk. Nevertheless, certain regulations were passed, which were meant to curtail the borderline mobster-like practices in collecting money. Nowadays, logbook loans are being issued only by companies, which have a “Consumer Credit License”, so make sure the place you are envisioning to procure your loan has such a thing. This means that they are registered with the FCA, the Financial Conduct Authority. You can verify if a business is legitimate through the FCA website.
Once you have verified the legitimacy of the business, make sure that you try and push the APRs down as far as they go, because no matter what the person you talk to there says, these rates are not written in stone. Additionally, shop around for better rates, particularly before you go to inquire regarding the logbook loan. If you can provide the person you talk to with verifiable better offers, you may receive an even better offer in order to generate business.
Read the contract thoroughly, even if you are being urged to sign as soon as possible. There is no reason to rush you, standardised contract do not automatically spell legitimacy. Furthermore, if there are passages in the contract that are preposterous and ludicrous, which you will most certainly find, feel free to cross them out and initialise what you have crossed out and have the manager there also initialise the crossed out sections. There is no reason that you should be obliged to owe the lender more than your car’s worth, any such paragraph should be crossed out and removed. If the lender is unable or incapable of assessing the worth of your vehicle, it should be that person’s problem, not yours.
Finally, make sure that there is a clause in the contract which will allow you to pay the loan back early, without penalties. Sometimes good fortune does smile upon everybody and the first thing you should do if you manage to get some money from anywhere, it is to pay back as much as you can. The loan aspects should be adjusted in your favour, if and when you pay back portions of the loan and you should have the right to a stay of execution, in case that you ask for a week without having to pay the instalment, in case of an emergency or temporary loss of work and/or wages.