Key Considerations When Taking out a Logbook Loan

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:

1. Budget

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.


5. Repossession

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.

5 Alternatives to Secured Loans

If you don’t have any property or asset to use as collateral for your personal loan, this is where unsecured loans may be a viable option. Whether you have good credit or bad credit, there are a number of unsecured loans ready to help you deal with any financial emergencies. Here are 5 unsecured loans that may be good alternatives to secured loans:

1. Credit union

If you’re a credit union member, you don’t have to look elsewhere for a quick cash loan. The loan offers may not be as much as what a secured loan can offer but credit unions can enjoy lower interest rates than other types of unsecured loans. With credit unions, you may be able to borrow between £500 and £5,000.


2. Credit cards

You can also always resort to credit cards to tide up your short-term financial needs. Credit cards come handy for most purchases nowadays. If you need cash, you can always use your cards cash advance. Just make sure you pay your bill in full to avoid incurring extremely high interest rates.

3. Peer to peer loans

Another type of unsecured loans that’s been gaining ground in the UK market is peer-to-peer lending. With this type of loan, you can borrow directly from the lender. There’s no need to go through the middlemen like how it is with banks. Just go to a peer-to-peer lending website and post the amount that you need. If you meet the lender’ requirements, you should be able to get your cash within 24 hours.

4. Guarantor loans

Guarantor loans are another type of loan that does not require collateral but it does need you to bring a guarantor to co-sign the debt agreement with you. Guarantor loans offer larger loan amounts than other types of unsecured loans because of the guarantor involvement. This type of loan is specific for people with bad credit looking for a fast, low cost alternative to secured loans.


5. Payday loans

Payday loans are the most controversial type of unsecured loans. These are loans offered for people with credit rating issues. As the name suggests, payday loans are loans that need to be repaid on your next paycheck or in the next 28 days. Payday loans are controversial because of its steep interest rates. On average, payday loans are advertised with 1,000% representative APR. It’s not only expensive but it’s also traps most borrowers into a cycle of debt.