When it comes to logbook loans, there are two school of thoughts. In other words, we have those who vouch for logbook loans and see it as a perfect avenue to get access to credit facilities ones credit score status notwithstanding and then there are those who advice against taking them out. If you are thinking of taking out a logbook loan for the first time, you might find yourselves between a rock and a hard place.
Granted, logbook loans were primarily meant for individuals who ordinarily couldn’t avail a loan from a high street bank to their state of their credit score. To such individuals, the introduction of logbook loans was a stroke of genius, an idea whose time had passed. They revelled in its promise and couldn’t wait to feel equal with others. However, with time, what was an avenue to even the scores came back to taunt them. Cases of defaults, customers getting deeper into debt and car repossessions spoilt what was once a fairy story.
It was not lost however on people that this was largely a result of making poor financial decisions on the spur of the moment. There are those who dived in head first without taking stock of how a logbook loan would affect their lives. That said, we can’t run away from the fact that logbook loans have changed the lives of many people in the UK. So is it wise to take out a logbook loan? Well, that depends on your reason for taking out a logbook loan.
If you are taking out a V5 loan to go for a vacation or buy your girlfriend a befitting engagement ring, then you are taking out a V5 loan for all the wrong reasons. You need to have a strong reason as to why you with to go for a logbook loan. If you have bad credit, a history of arrears or filed for bankruptcy in the past, it makes sense as to why you should go for this type of loan. After all, it’s your only option so to speak. Secondly, if you are seeking to rebuild your credit score status then taking out this kind of loan is a wise thing to do. However, ensure that you take a manageable amount that you can comfortably repay.
Another reason as to why it’s wise to take a logbook loan is if you intend to build a credit score from scratch. Considering that mainstream lenders might not be willing to extend to you credit based on the fact that they have no way of ascertaining your credit behaviour, going for a logbook loan might be the best thing to do.