5 Questions to Ask Yourself Before You Get a Logbook Loan
There’s no doubt that a v5 loan is a quick and simple way to get the funds you need when you need them. However, before you jump right in and sign that agreement, you should take pause and make sure it’s the right choice for you. Here are five questions you should ask yourself before you look to use your logbook to get a loan.
What Are the Risks?
This is probably the most important question of them all. Any time you borrow money – and especially if you’re using your car as collateral – there is a significant amount of risk involved. What happens if you can’t make a payment on time? What if you lose your job? All of these things are important considerations, and you should take the time to think them through. Missing even a single payment may cause your interest to skyrocket, and your lender would even have the legal right to take possession of your car, too.
Although many people claim that loans against logbooks are scams, this is far from the case. They are wonderful sources of quick cash for people who are experiencing financial emergencies, and because they’re paid back over 12, 18, or 36 months, they’re more flexible than other options. However, they can be risky, so it’s important that you understand these risks and what you will do should the unexpected happen.
How Do I Find the Best Deal?
With the dozens upon dozens of logbook lenders in the United Kingdom, you may find yourself wondering how to go about getting the best possible deal on your loan. After all, you probably don’t have the time to enquire with every single lender out there. With that information in mind, the good news is that there are a few things you can do to make the process easier on yourself.
There are several websites and companies that work with entire networks of logbook lenders. You provide your information, including personal, income, employment, and car information, and they will search their network of lenders to find one (or more) that will work with your unique situation. Then, if you are approved, you can review these offers and decide which is the right choice for your unique financial needs.
Do I Really Need the Loan?
Before you decide to take out a logbook loan, ask yourself why you need the money. All too often, people decide to take out loans on things like fancy new smartphones, a hot new television, or even a dream vacation without realizing the implications the loan may have on their lives.
The best advice is to avoid taking out this type of loan for frivolous things, or for things that you can save for and buy interest-free.
On the other hand, if you’ve missed a lot of work due to illness or injury, if you’ve been laid off, or if you need to make an emergency repair, a v5 loan may very well be what you need to take care of things. For example, replacing your furnace certainly isn’t cheap, and neither is repairing a leaking roof. Unless you have great credit or plenty of money in a savings account, you’ll be hard pressed to find that amount of money very quickly, making them a good solution in these situations.
Can I Afford to Repay It?
When you’re experiencing a financial emergency, your first instinct may be to find money any way you can and deal with the repayment later. This can have serious consequences, especially when it comes to logbook loans. Lenders lay out very strict terms, and they’ll require you to make each of your monthly payments on time. Late payments may result in significant late fees, and in some cases, even a higher interest rate.
What’s more, if you default on your loan, the agreement you signed allows your lender to take possession of your car. That lender will then sell it in order to recoup its losses, leaving you without a way to get yourself back and forth to work, to the market, or anywhere else you might need to go. It’ll also go on your credit report, which could prevent you from getting credit from other lenders in the future.
Are There More Affordable Options Available to Me?
Last, but most certainly not least, look into a variety of loan options before you settle. If you have a good working relationship with your bank, and you’ve been their customer for a long time, you might be able to obtain a personal loan there – even if your credit isn’t perfect. If you have assets of value, such as jewellery or fine art, and if you can prove their value, your bank may provide you with a secured personal loan with a much lower interest rate.
Other options include short-term loans which are typically for smaller amounts of money and designed to be repaid in 14 to 30 days, and these are great for people who don’t need a large loan and who can repay it in short order. When promptly repaid, these loans have reasonable interest rates. Finally, if you have a credit card, you may even consider using that to help you overcome your financial situation. Although there is also interest on that card, it’s likely lower than the APR associated with a logbook loan, and your payments may be smaller, too.
Logbook loans can be fantastic options for people who need to get themselves out of a financial emergency, but who lack the credit to get a traditional loan. These five questions can help you make certain that you’re making the best possible decisions about your finances, both now and in the future.