Risks in Logbook Loans and Proposed Solutions
Every now and then, people are confronted by problems that need an urgent solution. One of which (and the most common) revolves around money or finances. If you have savings, you can use it to solve your financial problem. However, if you have nothing, you can borrow from a friend. When you’re in need of a larger amount, then you can apply for a loan.
There are different kinds of loans such as Real Estate Loans, Salary Loans and Logbook Loans. All of these require collateral. For instance, a Real Estate Loan’s collateral can be a parcel of land and the structure built on it, a Salary Loan’s collateral is your salary, and a Logbook’s Loan collateral is your car or vehicle.
There are many financial institutions, like banks, that will grant you the kind of loan that you want as long as you can comply with their requirements. However, they conduct investigations, which you must also pass. Because there’s a lot of things to consider, processing time is longer. Between a real estate loan and a logbook loan, the latter is the more convenient and easier to apply.
Applying for a Logbook Loan
You can apply for a Logbook loan online. Its processing time is fast, and it offers flexible terms to the borrower. You can borrow about 50%, more or less, of your car’s value. However, the loan amount will still be determined by the loan officer. The loan term will depend on the borrower’s capacity to pay and will be scheduled weekly or monthly basis.
During the whole duration of your loan, your lender will keep your V5 or logbook documents as security since you can still use your car even if it is already used as the collateral on your loan.
Possible Risks with Logbook Loans: What Can You Do with Them?
The logbook loan can be an easy way for you to get or raise the funds that you need. However, this kind of loan is risky because the lender has the right to repossess and sell your car if you cannot pay your regular amortisation. The proceeds will be used to cover your unsettled obligation. If ever the car sale is not enough to pay for your total obligation, you will still have to pay the balance or difference.
The logbook loan has a higher interest rate. Because of this, your total obligation is also high. This will be reflected on your monthly amortisation, which is divided equally by the number of months you have promised to pay your loan.
To avoid being in an awkward situation when the lender will repossess your car, you have to think twice before getting the said loan. If you have already decided to apply for the loan, apply only the amount that you need and can afford to pay monthly. You also have to consider the loan term carefully.
Religiously paying your monthly amortisation will help you settle your obligation without any problem or difficulty.