The Advantages and Disadvantages of Logbook Loans

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Because I have quite a bit of experience with logbook loans, I have found some advantages and disadvantages that are important to take note of before applying for logbook loans. As you can see with the reviews of the different logbook loans I mentioned, not all logbook loan companies are consumer friendly. Some will take advantage of your desperation. Some will try to mislead you into accepting the terms. Unfortunately, when all the problems arise some time later, it’s hard to find the help you need to sort things out.

Advantages:

Quick Cash – if you have an emergency, a logbook loan is very convenient to say the least. Depending on the value of your car, you can borrow quite a big sum of money and get it really fast. Some companies promise release of the cash in one hour if everything is in order so I could say that logbook loans are very convenient.

No credit checks – if you have bad credit then this is a good way to go because you get to borrow money without being judged with your credit rating. Of course we cannot always control our financial circumstances so I can say that not all people who have bad credit are people who make the wrong financial decisions all the time. I for one just had a very unexpected emergency that led from one thing to another until my credit was ruined. If not for a logbook loan I took out some time ago, I would still be struggling with my very bad credit until now.

Helps rebuild credit – although logbook loan companies do not perform credit checks before approval of your loan, the debt gets reflected on your credit report. This means that as long as you make your repayments on time all the time, you can show that you are creditworthy yet again. You can even pay off the loan early to show off a little, of course that is if you can and you’re not just borrowing from somewhere else again. Try to avoid bad decisions and you will soon be on your way to a better credit rating.

Disadvantages:

Your car is at risk – since you are using your car as security to the debt, you will risk losing it if you default on your payments. Legally the logbook loan company will be able to repossess your car and there’s not much you can do about it unless you can prove that the logbook loan company has mislead you or have unfair credit practices.

High interest rate – like you saw from previous posts, APRs could be as high as 498%, which is ridiculous I agree. The thing is, since there is very high risk for the logbook loan company lending money to people with bad credit, they charge high interest rates to cover their risks. Essentially, if you apply for a loan with very good credit rating, you can expect the lowest rates possible, but if you are applying for a loan with bad credit then that’s a whole different story. Beware of additional fees too. Ask the logbook loan about administration fees or early repayment charges before accepting the terms so you don’t end up being sorry a couple of months later. Know what to ask the representative and make sure they explain the terms well enough including the fine print.

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