Logbook loans – why avoid them

Logbook loans – why avoid them

Struggling to make it to payday? Constantly worrying every-time the phone rings or the post arrives? When money is tight and it feels as though there’s no way out, many people turn to logbook loans as a quick, convenient financial fix.

To get a loan, car owners transfer the ownership of their vehicles to the lender. In return, they get a loan – complete with high interest! You can keep your car while you repay the loan. It only becomes your vehicle again when you’ve fully repaid the loan.

A lot of motorists don’t realise, this quick fix may be only the start of their financial problems.

Let’s look at logbook loans and why you should avoid them.

If you’re struggling with debt, don’t panic. There is lots of advice available and a consolidation loan from1Plus1 guarantor loans may help, subject to your’s and your guarantor’s affordability and creditworthiness. You can get a free credit check here.

Logbook loans often don’t require credit checks.

You may think this helps if you’re stuck, but the lack of proper checks basically means if you can prove you own your vehicle you can get a loan against it. This easiness means there is nothing in place to prevent people maybe already struggling with debt, spiralling further. With high-interest rates – we’re talking around the 250%-mark, additional fees and shorter repayment-plans, it can be a recipe for financial disaster.  This can be more than five times the rates from 1Plus1.

Look out for hidden fees

Logbook loans often come with hidden fees and rising costs, something you may forget to check for or think about when you sign your car ownership away. Even paying off your loan early, you could be facing a huge fee. Loans with 1Plus1 guarantor loans are totally transparent.

Slow or missing payments can cause more problems

If you don’t make all your repayments, this could create even more issues. If you continually miss payments, the lender has the right to repossess your vehicle including selling it on. They may even charge you for the costs of repossessing and selling your own car! It sounds unfair, but when you sign up to a logbook loan you can really be at the mercy of the logbook lender.

Typically, if you have other debt and financial issues hanging over you, then it’s unlikely that a logbook loan will fix them, allowing you to return to a financially healthy life improving your credit score, as a lot of logbook lenders don’t report to the credit bureaus. You may make your financial situation worse and lose your vehicle. How would you manage then?

Whether you have a bad credit rating or a great one, we're here for you.

All loans are subject to meeting credit worthiness and affordability criteria

If you think you may be interested in a 1Plus1 Loan, please give us a call on 0330 1200 313 and one of our friendly staff will be more than happy to discuss the process with you, or start your application here.