Financial stability in nowadays daily life is rather a fictional theory. People have expenditures that cannot be met with regular means, no income is capable of covering the prospective debts of an individual. The reasons are various, but mainly are found in the fact that we are living in a consumer society were spending and purchasing is all there is and all people think they need, with various degrees of morality and common sense added in. In order to survive the traps of everyday life, people often juggle money from all available sources, thus managing to cover day-to-day costs and prolong the perhaps inevitable collapse for another month, year or only a day.
So it happens that people become more desperate as proper and affordable means to cover the financial gaps slowly disappear. The overdraft on the account is maxed out, the credit cards are maxed out, the private loan is already spent, the guarantor loan is spent, money is getting tight and cash is running low, payments are due and people do not know what to do anymore. In such a situation, there are not many options open. Either you borrow from someone cash, a friend or family member, or you take out one of them bad credit loans, such as paycheck loan or logbook loan, if you have a car.
A logbook loan is given to people who own a car that is unburdened by debt. If you own that car, you can get approximately up to 40% of the car’s worth in cash, whereby the car’s vehicle registration certificate, or logbook, is retained by the lending entity as collateral, additionally having the debtor sign a bill of sale, which invokes possession transfer as soon as you are late with payments, resulting in the lender owning your car. While you are paying the debt off in time, you retain the vehicle and can use it as your own, after you have paid off the debt, the bill of sale becomes void and you get y our logbook back, becoming once again formally the owner of your vehicle.
While logbook loans are not complicated and very fast to generate the pay-out to the debtor, often within hours, the logbook loans are unfavourable and expensive, APR rates are often astronomically high, up to 500%, rules regarding repayment are strict and very often you wind up paying back five times the amount you borrowed. Unfortunately, people are very often desperate and see no other way out of their current financial predicament, leaving them vulnerable to such schemes. Despite initial willingness of the government to prohibit these extortion-like loans, the government only curtailed excessive collecting manoeuvres by the lenders and limited the lending to registered entities.