Logbook loans are probably one of the most controversial forms of loan existing at present. Intended as a type of bad credit loan for those who would otherwise struggle to borrow money, car logbook loans are considered highly risky due to their interest rates and dubious terms and conditions.
What is a Logbook Loan?
Log book loans are basically secured loans where the loan is secured against an item of value – in this case, a person’s vehicle (as opposed to standard car loans, which are personal loans designed specifically for the purchase of a vehicle). This is done for the benefit of the lender, who will retain their customer’s logbook or vehicle registration certificate to ensure they receive their money back. When the loan is repaid, the documents will simply be returned to the owner. If a person fails to repay their debt at the end of the car log book loan period, however, their lender is entitled to take possession of the secured vehicle and sell it on, even if the borrower has sold the vehicle in the meantime.
Also referred to as car title loans – as the customer pledges the title of their car as collateral – these financial products are very easy to come by. Instant logbook loans are advertised by online lenders and high street based providers (including specialised logbook loans companies and more general money lenders) for those in need of cash in a hurry as they claim to provide applicants with a decision (and cash if they are successful) the same day of applying. Borrowers are almost guaranteed a title loan provided they are the legal owner of a vehicle and the car is clear of any outstanding finance.
What makes auto title loans so appealing – but equally as risky – is the fact that they are accessible to those with bad financial histories or who have even been suffered bankruptcy in the past. Vehicle title loans for those with a bad credit rating can offer applicants same day loans from £500 upwards to be repaid in monthly instalments. As with other bad credit loans, these types of title loans do not perform any credit checks on the customer, which is the reason why interest rates are usually sky high.
Problems with Logbook Loans
The amount of log book loans complaints lodged each year is unsurprising given how expensive these products are. The interest rate on a car title loan is usually between 300 and 400 per cent APR, though this can rise up to 600% – a great deal higher than with more standard personal loans. In addition to this, there can be substantial loan charges attached.
A log book loan complaint can be made by a borrower if they feel they have been subjected to misleading sales where their lender has failed to check they can afford the repayments and the person subsequently risks repossession of their vehicle.
Some may feel they do not have any alternative borrowing options due to lenders tightening their criteria on loaning money, and so have no choice but to take out an auto title loan. Customers should thoroughly compare log book loans to ensure they get the best log book loan deal for them. The best logbook loans provide reasonable repayment terms to suit borrowers’ financial situations while still charging low interest rates if the vehicle title loan lender doesn’t consider lending as big of a risk for them.
Despite the small number of reasonable logbook loans that are available, it is still advised that anyone considering taking one out first seek professional advice, especially if they are struggling with debt: free debt advice is available from a number of sources; this unbiased advice can include help with general debt management and also tips on debt consolidation.