Dangers Of Bad Credit Logbook Loans
Bad credit logbook loans are a popular option when it comes to sub-prime loans and finance. Normally relatively small loans are provided and secured on vehicles such as cars, vans and motorcycles or any other vehicle with a logbook, through a Bill of Sale.
The popularity of logbook loans stems from the open eligibility criteria and the subsequent attractively worded adverts such as; no credit checks loans, same day cash loans, any purpose loans, bad credit loans, CCJs accepted, etc.
Because the loan is guaranteed against the value of the vehicle there are no credit checks, if the applicant has already been refused a loan elsewhere it doesn’t matter, employed or self employed are accepted and a bad credit history, poor credit rating, CCJs, defaults, arrears, even bankruptcy is OK. All that matters is that the applicant is the legal owner of a vehicle that is free, or nearly free, of finance, is at least 18 years old and a UK resident.
All this sounds too good to be true – believe me, there are plenty of drawbacks and things to be aware of though:
The loans are often subject to a very high interest rate with APRs of over 470% and annual interest rates of over 120% being not unusual – study the quote carefully.
Borrowers may not always fully aware of the actual cost of the entire loan – check the terms and conditions and the small print.
If the borrower fails to make the repayments as per agreement, the logbook loan company can easily seize the vehicle … because of the Bill of Sale they don’t even need to obtain a Court order.
If the vehicle is sold and the proceeds of the sale do not cover the outstanding loan the customer can still be liable and pursued for the difference.
Logbook Loan agreements are regulated by the Consumer Credit Act 1974 – any company operating in this field MUST have a licence to lend and collect money – ALWAYS check.
There has been a lot of controversy surrounding these logbook loans over recent times with many calling for them to be banned. Study and research carefully and make sure you know exactly what you’re signing up to and always try to avoid borrowing in the first place. They can be very expensive and very risky and require the security of a vehicle which is at risk if repayments are not maintained.
Remember that all logbook loans are secured on your vehicle and a failure to make repayments could see your vehicle sold to settle outstanding balances.
The nature of a Logbook Loan is often of particular attraction to those with a bad credit history, those in debt and those in financial difficulty and needing a loan quickly but struggling to find a lender willing to help – THINK CAREFULLY AND SEEK INDEPENDENT ADVICE FIRST – there may be a much better alternative or a much better solution.