Advantages and Disadvantages of Logbook Loans Explained

If you are looking for a good loan to take care of your financial problems a logbook loan can come in quite handy. This loan, which uses your car as a collateral, is available in UK, where it has become very popular in recent years. However, before you decide to apply for one (an easy and quick process, to be sure), you need to first know a thing or two about the advantages and disadvantages of logbook, or V5 loans.

Advantages of Logbook Loans

  • As already mentioned, the application process for these loans is quick and easy and you can get it done and get approved for it in less then 10 minutes.
  • Once you're approved, the money will be available much faster than is the case with standard loans. You can get it from your bank account the same day you applied for it.
  • There is no credit check. Logbook lenders are not interested in your credit rating, as they already use the car as a collateral. This speeds up the process considerably and opens these loans for people who would otherwise get rejected by a bank.
  • A logbook loan can also be taken for any purpose you want. The lender will not ask you why you are applying and what will you use it for.

Disadvantages of Logbook Loans

  • They are a short-term type of loans. Therefore, they are only really useful for urgent matters. Using them for problems that can take weeks or months is not the best decision.
  • They include a high interest rate. While they are a good way to get your hands on some cash fast, they are probably one of the costliest ways of doing so.
  • Logbook loans, just like any other high interest loan, can lead to debt traps as your loan outstanding keeps getting bigger and bigger and drains your finances.
  • You risk getting your car repossessed. Since the lender keeps possession of the vehicle's logbook document, which contains all the important information about your car, he has the right to repossess due to non-payment on your part. He doesn't even need a court order for this.