Obtaining and repaying a loan
Obtaining a loan
Logbook loans are recommended for individuals who are unable to borrow money through conventional means, such as by obtaining a personal loan to purchase a vehicle. The promise of quick cash and absence of a credit check makes these loans especially attractive to borrowers with poor credit. To avoid the pitfalls associated with a particular type of loan, it is prudent to maintain a watchful eye. The loan is typically issued via check, which can take several days to clear. Some logbook companies provide prompt service, but applicants may be charged an administrative fee of up to 4% of the loan amount.
Repayment of a loan
The typical repayment period for a logbook loan is 78 weeks, with payments made weekly or monthly. Until the final month of the contract, when the borrower is responsible for repaying the principal amount, the regular payments typically include interest. The borrower has the option to repay the loan early; however, early repayment may incur fees. Once you have confirmed your ability to repay the loan, it is advisable to review the terms and conditions.
The main threats
The APR (Annual Percentage Rate) for logbook loans can be at least 400%. Therefore, if you borrow £1,500 over 78 weeks, you will be required to make a weekly repayment of £55. This would result in a total repayment of over £4,250, including a monstrous amount of interest of £2,750. Logbook loan companies frequently justify the high interest rates by emphasizing that the loan should be used for short-term financial needs only.
If you default on a logbook loan, you run the risk of having your vehicle repossessed. Therefore, whenever you sign up for a logbook loan, you must be aware that your vehicle can be repossessed at any time if you fail to make payments. The company can sell the vehicle to recover the delinquent amount.
After selling the vehicle, if the logbook loan company is unable to recover the full loan amount, you may be held responsible for the shortfall. The company may file a lawsuit to compel you to pay the outstanding balance."""