Logbook loans are a relatively simple and straightforward form of
credit in the United Kingdom. Different from payday loans, logbook loans
use your vehicle (and your logbook document, or your V5c registration
document) as collateral in case you should default on the loan. You see
when you get a logbook loan you can get a loan at a lower APR rate, and
you can get access to more funds than you could with a simple payday
loan. The reason for this is that, unlike those other loans, a logbook loan is leaning on your vehicle as insurance that you pay what you owe.
Looking at it that way, logbook loans are fairly simple to understand. However, there are still complaints and problems with logbook loans, both from the side of the lender as well as from the side of the customer. Many of these problems aren’t unique to this form of loan, but there are still cautions that need to be taken.
For instance, logbook loans can be used to pay for nearly anything. Whether you need to repair your home, or you’re scraping up money for plastic surgery, one of these loans will more than suffice your purposes. Because of this width of field the lender should be concerned with what the borrower needs the money for. Unlike a more standard bank loan though, logbook loans are made fairly quickly, and the amounts can reach up to 50,000 pounds depending on the make of the borrower’s vehicle. That’s a lot of money to let walk out the door if the person is using it for something non-essential. Then again, this could be said about any type of loan.
Logbook loans, as mentioned, are determined based on the value of the borrower’s car. For the lender this provides a bit of security, and it lets them rest easier knowing that even if the person that borrowed money defaults, the lender still has something that can be used to pay back the loan. For the borrower though, logbook loans may not be the solution that they’re talked up to be. For instance, say you need money to fix your home, but you drive something older and of middling value. You can get money this way, but it may not be enough. Worse, if you accept this loan and then have to get another (bad practice in general) then you’ll have several debts to pay back rather than the one.
When used properly as a financial tool, logbook loans can turn your car into a thing of value that helps you get the money you need on time and quickly. However, logbook loans are typically aimed at those with lower to bad credit, which begs the question of just how wise a lending institution is to give large amounts of money to those that have been irresponsible in the past, or who have made very poor financial decisions. On the other hand, these loans are a much better tool for the lender, since logbook loans do provide an “if all else fails” route, just in case the loan never gets repaid.
Looking at it that way, logbook loans are fairly simple to understand. However, there are still complaints and problems with logbook loans, both from the side of the lender as well as from the side of the customer. Many of these problems aren’t unique to this form of loan, but there are still cautions that need to be taken.
For instance, logbook loans can be used to pay for nearly anything. Whether you need to repair your home, or you’re scraping up money for plastic surgery, one of these loans will more than suffice your purposes. Because of this width of field the lender should be concerned with what the borrower needs the money for. Unlike a more standard bank loan though, logbook loans are made fairly quickly, and the amounts can reach up to 50,000 pounds depending on the make of the borrower’s vehicle. That’s a lot of money to let walk out the door if the person is using it for something non-essential. Then again, this could be said about any type of loan.
Logbook loans, as mentioned, are determined based on the value of the borrower’s car. For the lender this provides a bit of security, and it lets them rest easier knowing that even if the person that borrowed money defaults, the lender still has something that can be used to pay back the loan. For the borrower though, logbook loans may not be the solution that they’re talked up to be. For instance, say you need money to fix your home, but you drive something older and of middling value. You can get money this way, but it may not be enough. Worse, if you accept this loan and then have to get another (bad practice in general) then you’ll have several debts to pay back rather than the one.
When used properly as a financial tool, logbook loans can turn your car into a thing of value that helps you get the money you need on time and quickly. However, logbook loans are typically aimed at those with lower to bad credit, which begs the question of just how wise a lending institution is to give large amounts of money to those that have been irresponsible in the past, or who have made very poor financial decisions. On the other hand, these loans are a much better tool for the lender, since logbook loans do provide an “if all else fails” route, just in case the loan never gets repaid.
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