Ever since logbook loans became available in the UK, a growing number of experts have criticized the financial product for its high risks and steep interest rates. Despite the risks, however, more and more borrowers continue to avail the loan because it has several advantages.
With the security requirement, logbook loan lenders are able to offer higher loan amounts and flexible repayment terms. But more importantly, the financial product does not need customers to have a good credit. If you’ve been struggling to avail a personal loan due to your less than perfect credit score, logbook loan lenders offer you a chance to avail a quick cash solution to your financial emergencies.
But remember, it’s not all advantages with logbook loans. Just like other types of personal loans, the financial product also has its downsides. One of which is the high cost. Many experts consider logbook loans risky because of its high representative APR, which is set at 400% on average. Then there’s also the high possibility of vehicle repossession. In cases when customers are no longer financially capable to repay the loan, lenders can repossess your vehicle as payment for the loan balance.
More than the high cost, vehicle repossession is what many experts consider as the riskiest part of applying for a logbook loan. If you’re asking whether logbook loans are risky or not, the answer is yes. Logbook loans are risky because of the high interest rate and the risks of repossession. But it’s also worth nothing that logbook loans are just like other types of secured loans.
Repossession is part of the credit agreement when you’re applying for a secured personal loan. As borrower, it’s your job to ensure that you’re only borrowing what you can afford to avoid consequences such as your security being repossessed by your lender. No matter the risks involved, if you’re being a responsible borrower, you need not worry about vehicle repossession. At the end of the day, it’s all about following the simple rule of being responsible to your financial and borrowing decisions.
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