Logbook loans for anyone who hasn’t heard of them before are a loans product created specifically for people with bad credit who cannot get access to cash from any other source. The truth of the matter is that anyone who has the ability to get cash from another source wouldn’t touch the logbook loan with a barge pole.
They are a secured loans product which means you have to put your car or motorcycle down as collateral in order to be approved for them. This means that your vehicle is on the line and if you don’t manage to repay your debts the lender can come knocking on your door and repossess your car to sell at auction and recoup the money you owe. This not might seem so bad if you have a regular income and feel like you will have no problems getting your repayments in on time. Remember though that even the most organized of people can meet unexpected financial difficulty and there is always the chance that you will somehow find yourself short one week and unable to make your payments.
The fact that you might lose your car is not the only negative aspect of these though, they also charge extremely high interest rates. In fact they are so high that this type of loan, also known as a car title loan, has been banned in many states in the US. The lender might not make it absolutely clear when you are applying for a log book loan but you are going to repaying them a lot more money than you borrow. If you are short on cash taking out one of these over a period of 18 months is going to leave you in a worse state then when you started, even if you manage to reign in your finances in the meantime.
The advice from any impartial financial expert would be to avoid log book loans by any means possible. If you are desperate for cash in an emergency find some other way of getting access to it that isn’t going to cripple you.
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Topics: Finance