Should You Take Out a Logbook Loan?

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Logbook loans are very popular in the UK. In fact, the financial product continues to draw more borrowers despite the controversies surrounding. Even with financial advisors discouraging borrowers from resorting to the loan, logbook loans remain a go to choice especially for people with bad credit. And you can’t really blame them.

When financial emergencies arise and you can’t take out a personal loan from major banks and lenders because of bad credit, products such as logbook loans come handy to save the day. In exchange for the quick fix solution, however, is the high interest rate and high risk of vehicle repossession.

Because logbook loans are borrowed against the value of your car, you are essentially putting your vehicle at risk. You may lose it in the event that you are unable to repay the loan. A few months of missed or delayed payments, for instance, will get your lender sending the debt collector to hound you. If they don’t get paid and receive no response from you after several attempts, you may find yourself without a car in no time.

With the high cost and high risk combined, should you still take out a logbook loan? This is one question most people who are considering a logbook loan are probably asking themselves as well. Logbook loans, after all, may be easy to access but it’s not always the best way to raise funds.

So to answer the question if you should take out a logbook loan or not, it depends. It depends on your financial circumstances, needs and ability to repay the loan. At the end of the day, if you know what you’re getting into and you’re committed to repay your liabilities on time then a logbook loan is worth considering.

To help you make a sound decision, there are key factors to consider when looking at logbook loan as a solution to your financial needs and they include:

Loan amount

Like with any other type of loans, one of the first things you need to take into account is the amount of loan you need. With logbook loans, you can borrow anywhere from £500 up to £50,000. Most lenders will also let your borrow a maximum of up to 70% of your vehicle’s official trade value. Borrowing the maximum amount you may be eligible for may be tempting but it’s always best to keep your borrowing at a minimum. In fact, the trick is to borrow only what you need and can afford to avoid all manner of financial complications in the end.

Cost

The cost of your logbook loan depends on a number of factors. One of which is the interest rate then there are also hidden fees to think about. To know if you’re getting a good deal on your logbook loan, one way to compare your options is by looking at the annual percentage rate or APR. Most lenders advertise their logbook loan deals by providing borrowers with information about the Representative APR. In general, the lower the APR, the cheaper the loan will be. You can check out SimpleLogbookLoan today for the cheapest deals available in the market.

Lender reputation

If you’ve decided that a logbook loan is the way to go, don’t sign the deal just yet until you’ve checked your lender’s reputation. One way to do that is to read consumer reviews. If majority of the borrowers were happy and satisfied with their deals, chances are high that you’ve found a reliable lender you can trust to give you a competitive deal.

Applying for a loan? Here’s what to keep in mind

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If you’re in the process of applying for a personal loan, there are key questions to ask yourself. Remember that borrowing money especially large amounts of money is pretty serious. Ask yourself the following questions before signing any deal to ensure that you’re making the right decision:

Do you really need the loan?

Just because you are eligible for a loan doesn’t mean you should take it. You might be surprised but there are plenty of people who borrow money without even needing it. It’s available after all so might as well take it. That kind of mindset, however, can be dangerous. Borrow only when needed to avoid complications.

How much do you need?

If you’re sure that you really need the loan, the next step is to ask yourself how much do you really need? Avoid borrowing more just because it’s available. Doing so will also mean your monthly repayments.

Do you know how much the loan costs?

Before signing any dotted line, make sure you understand the cost of the loan. Investigate the interest rate and related charges. Compare it with similar offers so you’ll have a better idea of what’s available in the market.

Do you understand the terms and conditions?

Taking your time to understand the terms and conditions of the personal loan is also imperative. Speak with a financial adviser if needed and ask questions you can think of to get all bases covered.

Can your budget handle the month repayments?

Most important of all, you need to make sure your monthly budget can actually cover the monthly repayments. Before entering any credit agreement, you should make a commitment to pay your dues on or before the due time. You can only do this if you ensure you can afford the monthly repayments prior to signing any dotted line.