Logbook loans have become one of the most popular bad credit loans for people who cannot apply for a loan anywhere else. With fast, no credit check approvals, everyone who owns a vehicle can easily apply for a loan and get approved within the same day. However, as much exciting as it may seem, you should take the time to answer these questions before making up your mind on a logbook loan.
Why Do You Need a Logbook Loan?
This is the first and most important question you need to ask yourself. Logbook loans are risky, and if you’re not careful, you can lose your vehicle. Ask yourself what you want to do with your money. Are you taking out a loan for an emergent need, a not so urgent need, or for pure pleasure? Before you decide if logbook loan is right for you, make sure your purpose outweighs the risk.
How Bad is your Credit Score?
Most probably, you are looking at a logbook loan because you already have poor credit and you are afraid you’ll be denied a loan with traditional lenders. However, it might not be wise to resort immediately to logbook loans, unless your credit is as bad as having filed a bankruptcy in the past. If there are things you can do to repair your credit, such as fixing errors or paying your balances, do them first.
Have You Explored Other Borrowing Options?
If your credit score is pretty bad and quick fixes are not possible, logbook loan should not be your first choice either. You may want to ask the help of a friend or relative who might be willing to trust in you when no one else can. Just make sure you don’t break this trust, as the last thing you want in your complicated financial life is the addition of relationship issues.
For How Long Are You Planning to Pay for the Loan?
Logbook loans are expensive. With their soaring interest rates, you can end up paying for more than double of your original loan amount. This is why it is important to determine how quickly can you pay for the loan. No matter how small or huge you intend to borrow, dragging the debt for such a long time can incur very high interest rates. Logbook loans are perfect for immediate needs which you can pay back in only a short span of time, reducing the amount of interest accumulated.
Are You Dealing With a Reputable Company?
With the logbook loan’s popularity, finding a lender is easy, choosing the best out of the hundreds is not. Your major concern is not only to grab the cheapest rates, but you need to make sure that the company you are dealing with is authorized by the FSA (Financial Services Authority) to conduct business in the UK. Furthermore, you have to make sure that there are no hidden charges and that the company abide by the Code of Practice.