When you have a poor credit history, finding a personal loan you can easily get approved for is going to be a struggle. In fact, you might receive more rejections than approval in the end. This is where alternatives such as logbook loans come handy. With logbook loans, you can have bad credit and still get approved fast. This is because the loan type is specifically offered for people with bad credit problems. If you’re ready to avail the loan, here are key factors to consider if you want logbook loan:
Budget is key when applying for any type of loan. Knowing how much you need and what you can afford will ensure that you won’t borrow more than necessary. Otherwise, you may be putting your finances at risks. When you borrow more than what your budget allows, you’re not only risking increased interest rates and penalties but also vehicle repossession.
2. Loan amount
Whether you need a small amount or a large amount of money, logbook loans may be perfect for meeting whatever personal need you have in mind. With logbook loans, you can borrow money from as small as £500 to as much as £25,000. Some lenders even offer loans up to £50,000. As long as your vehicle’s value meets the loan requirements and your budget is sufficient to handle the monthly repayments, you’re on your way to getting approved for a logbook loan fast.
3. Repayment terms
Repayment terms for logbook loans are not as lengthy as other types of secured loans such as mortgage loans. In most cases, you’ll be given 12 to 36 months to repay your logbook loan. For large loan amounts, this may not be enough. But for smaller loan amounts, the repayment terms offer just enough time so you can make budget-friendly repayments each month. Most lenders let you choose to pay the loan either bi-weekly or monthly.
4. Representative APR
Before you sign any logbook loan deal, it’s important to fully understand the concept of representative APR. APR, which stands for annual percentage rate, is the financial concept used by lenders to advertise logbook loans. When you’re shopping around, you’ll probably see deals with 400% APR on average. The APR represents your loan’s cost inclusive of interest rates, admin fees and other related charges on an annual basis.
It is also important to remember that the representative APR may not be the actual rate you’ll be able to avail. Only a small percentage of borrowers get to avail the rep APR. For the rest of borrowers, you are likely to get charged more depending on your credit score and the current market rates. There are also deals that may offer lower APR. All you need to do is compare your options as thoroughly as you can to find the most affordable deal available in the market today.
There’s also the matter of repossession to think about. Logbook loans are risky because it is a secured loan. If the borrower is unable to repay the loan, lenders may resort to vehicle repossession to cover for your loan balance. To avoid such a consequence, nothing is more important than planning your loan thoroughly starting from setting your budget and how you intend to repay the loan. As long as you don’t miss any repayments, you wouldn’t encounter any major problem with logbook loans.