The immensely popular logbook loan has been a constant source of debates regarding its value. While many criticized its sky-high rates, there are those who believed that it was worth the interests. As to whether or not logbook loan is a good borrowing option depends on its importance to the borrower.
Also known as the V5 loan, logbook loan involves using the V5 document or “logbook” of the car as collateral against the loan. What made logbook loans popular- and at the same time controversial- is that it doesn\’t require a credit check, which means it is mostly geared for those who have bad credit and won’t be traditionally approved a loan someplace else. Those who are self-employed, who have bad or insufficient credit history, and even those who have filed bankruptcy in the past can secure a logbook loan without difficulty
One good thing about a logbook loan is that approvals are instant and you can take your money home within the same day of application. Because there are no credit checks required, the process is quick and simple. In addition, logbook loans have minimal requirements which are easy to accomplish. It is something that even those with good credit can take benefit from, especially if you’re such in a hurry to borrow that you need to bypass all the lengthy loan processes.
Another strong point with logbook loans is that you can keep your vehicle even while under the loan. This is particularly important if you are not willing to surrender your car and access other forms of transportation for the time being. Furthermore, this can be useful if you want to borrow money to pay for the repairs or maintenance of the car itself.
However, with logbook loan comes the risk of losing your vehicle. A type of secured loan, this gives the lender the right to repossess your vehicle if you failed to make the repayments, and this can be done even without a court order. There’s also a limit to the amount you can borrow, which is usually only up to 50% of your vehicle’s value. So if you lose your vehicle for far less than what it’s worth, you’ll definitely end up regretting it.
Logbook loans are also known for its notorious interest rates. Some companies have rates as high as over 400% APR. Although the payment schemes are flexible and you can shorten or prolong the term based on your payment capacity, this can still be very expensive in the long run. However, if you really, really need a small amount of money which you can pay in a short span of time, logbook loan might be a good option so long as you can pay for it quickly.
In conclusion, there’s no one way of telling whether logbook loan is good value for your money or not. It is entirely up to the individual’s situation and the effects of the loan to judge whether it was worth the risk.