Logbook Loans And Its Cost

Logbook loans do not only come with very high interest rates but the financial product also poses high risk of vehicle repossession. Despite these major downsides, more and more borrowers continue to avail the loan because of lack of a better alternative. For people who struggle with getting a loan because of bad credit, logbook loans offer an easy way out.

Though expensive and risky, logbook loans offer the promise of quick cash. If you’re really stuck in a financial emergency and you need money fast, logbook loans may just save the day. Just make sure you understand the cost and the cons before you sign any contract deal.

For logbook loans, the interest rate is around 400% representative APR. Some deals may offer even higher interest rates. But there are also lenders who may offer cheaper deals. Your job is to look for these providers with lower representative APRs. For the sake of illustration, let’s say the rate is 400%. If you want to borrow £1,500 over a 78-week repayment period, your monthly fee will be £55 or £4250 in total. You’ll be paying a lot of interest for a £1,500 at the end of 78 weeks.

Aside from the high cost, other cons to consider include the lack of consumer protection similar to what you’ll get with a hire purchase agreement. In order to be eligible to borrow a logbook loan, your vehicle must have a value over £500 and it should be free of any financing as well. And since your loan is secured on your car, you may lose your vehicle if your financial circumstances change and you can no longer repay for your loan.

Logbook loans are costly not only because of the very high interest rates but also because of the risk of vehicle repossession. If you do decide to apply for this type of loan, make sure you’ve weighed your options carefully.