Logbook loans may be getting some flak from some experts but the fact remains that it is currently one of the best available short term financing options in the market today if you need quick cash. The product is especially suitable for people with bad credit and has been refused a loan elsewhere because of it.
Like with any financial product, logbook loans come with pros and cons. At the end of the day, it's just a matter of understanding how it works so you know exactly what you're getting into.
One of the best lures of logbook loans is the promise of quick cash. In this time and age when cash is almost always short, logbook loans come as handy alternatives especially for people with bad credit. Most lenders guarantee same day processing for example. Provided that you meet the requirements and you own your car, you can avail of this financial product event if you have bad credit.
Logbook loans are increasingly becoming more popular by the day because of its no credit check policy. Since the financial product is created primarily for people with bad credit, majority of lenders do not run credit checks on loan applications. This means faster processing and more convenience for the borrowers. But there's also a downside. In exchange for the promise of quick cash and no credit check, however, is the high price attached to logbook loans.
Since there are no credit checks, everyone with bad credit can apply for a logbook loan. While approval is not 100% guaranteed, logbook loans are undeniably one of the easiest loan options to get approved for. You just need to prepare to get charged a higher interest rate in exchange of the no credit check privilege.
When you take out a logbook loan against your car, your lender will require you to hand over your car's V5 or logbook document alongside other requirements like proof of identification, proof of income, billing address, MOT certificate and insurance details among other things. As soon as you have over the V5 document and sign the dotted line that would temporary ownership has been transferred to your lender.
Securing your personal loan against your car is exactly where the risks lie. There's always the possibility of losing your car to repossession in the event that you can't repay your monthly dues. The trick, therefore, to borrowing money especially through logbook loans is to follow the simple rule of debt. Borrow only what you need and what you know you can pay for. This way, you won't have to worry about drastic financial circumstances like losing your car or hurting your credit score even more.