Just like any other loan option, logbooks has its advantages and disadvantages that may imperatively assist you in the decision of whether or not to take a logbook loan. Knowing more about a service or product goes a long way in helping you make up your mind. Save yourself the trouble of searching the web for insurance information. Here is a well-researched summary of the pros and cons of these logbook loans.
Firstly, it is easy to process a logbook loan. All you need is your V5 document and to also sign a bill of sale. This is not in any way involving like other mainstream lenders, where you may be required to fill a lot of documents for your loan to be processed. It is quite an easy and fast procedure with limited paperwork.
Additionally, logbook loans will take you only one day to get the amount of cash borrowed. In fact, it may be given to you immediately you are done signing the bill of sale. In the case of other lenders, such as banks, processing a loan is a process that may take even weeks, sometimes months, to materialize. Furthermore, there is a high chance that you may end up not getting the loan in the long run.
No credit check!
Another great advantage with logbook loans is the fact that there’s no credit check involved. If you’re struggling to get approved for a personal loan because of bad credit, applying for a logbook loan is one option you might want to consider. Whether you have a bad credit score because of missed payments or defaults, it doesn’t really matter. As long as you have a vehicle you can use as collateral, avail a logbook indicating that the vehicle is yours.
Lastly, the amount to borrow is dependent on the condition of your car, hence borrowing large loans is possible and can be repaid from 12 months up to 36 months. You can borrow up to half the net worth of your car and up to 70% in some cases. Therefore, the amount of money is usually very high.
You may lose your car
One of the disadvantages of a logbook loan is that you may lose your car in case you fail to repay your loan in time. This will be a great loss on your part. Considering the fact that most loans are half the net worth of your car, losing your vehicle could be unbearable. You can learn more about the logbook loan risks on this post.
Not so economical at times
The second disadvantage is that logbook loans have got higher interest rates compared to loans from other financial institutions such as banks and SACCOS. Such loans from make repayment easy and manageable. But as for logbook loans, you might struggle a bit while making the repayments because the Annual Percentage Rate is usually very high.
Not so easy to track
Moreover, it may not be easy to keep track of the amount you owe, particularly if the lender doesn’t take direct debit for the weekly payments. So, if you are not keen, you may end up paying twice or more in a week. However, if you find yourself in a position whereby you are not sure of how much you have paid back, simply inform the lender and they’ll give you a statement of the debt you’ve got.