Let’s face it. Logbook loans have indeed been a necessary evil. Can you imagine where individuals who have filed for bankruptcy in the past or have a well-documented history of arrears would get access to credit facilities if logbook loans were non-existent? I mean, it would be a chaotic world full of resigned individuals to the reality of their past financial impropriety. Thanks to logbook loans, the situation explained above is nothing more than a figment of imagination. Every single year, thousands of individuals in the UK continue to get financial reprieve in the name of logbook loans and this trend is not about to come to an end any time soon.
However, with all the benefits that logbook loans promise, financial pundits are quick to point out that it should only be taken as a measure of last resort. But why would they be adamant about this. Well, for starters, logbook loans are a tad too expensive. We are talking about massive interest rates which if not managed well could see a person plunge into a debt hole with no hope of climbing out. On the average, the APR for logbook loans is approximately 400%. This however is not uniform and it’s not uncommon to find lenders who charge even as much as 1000%.
The result is that the borrower ends up repaying more than twice the principle amount and any defaults mean a high amount of debt. Secondly, logbook loans are not for individuals struggling to make ends meet. With the huge interest rates, chances are that you will default on repayments and make your financial situation even worse.
Of course, the number one reason as to why you should only go for logbook loans as a measure of last resort has to do with the fact that car repossession is a reality and not a myth. Missed payments and inability to service your loan could see you lose possession of your car. With the high monthly or weekly repayments, this is increasingly becoming a reality especially if you are struggling to make ends meet.
Last but not least, incessant calls reminding you to pay off a late payment would definitely not give you peace of mind. If any, it would just further compound your situation. There are documented cases of unscrupulous lenders who would ring your phone on end simply because you missed a payment. This gives you stress and if not checked, could lead to depression. As if that is not enough, some lenders would send collectors to harass and threaten you in an attempt to get you to pay up.
In light of the above, only go for logbook loans if you don’t have any other alternative or if you have a good plan of repayment. Above all, ensure that you do due diligence and go for a reputable logbook loan provider!