A sneak peek into risks associated with logbook loans
While logbook loans are celebrated by individuals with a less than average credit score, there are indeed a number of risks associated with them. Granted, there are two sides of a coin. When it comes to logbook loans, there is the good as well as the bad side. The risks are what logbook loan borrowers have to contend with in an effort to get approved for an emergency loan. With that said, let's dive into the risks or rather demerits associated with logbook loans.
High interest rates
The reality of the matter is that logbook loans attract high interest rates as compared to standard loans from high street banks. The average APR for logbook loans is somewhere in the region of 400%. However, this is not across the board as different logbook loan lenders set the interest rates and itís not unusual to find providers that set their APR as high as 1000%. The resultant effect is that logbook loans become very expensive as compared to ordinary loans which essentially means that a person ends repaying more than twice the principal amount.
If there is something that has tarnished the name of most logbook loan lenders, it has to do with the wanton repossession of cars at the first sight of a borrower having trouble making repayments. In fact, unscrupulous logbook loan lenders are fast to repossess a personís car simply because they have missed a payment or two. This, of course, makes a borrower worried throughout the term of the loan and therefore it is easy to see why most individuals who have taken a logbook loan lack peace of mind.
Getting sued by the logbook loan lender
If you thought that repossession of your car is all it takes to put the nightmare of logbook loans behind you, I am sorry to tell you that you could be wrong. At times, the proceeds from the sale of your car might not be sufficient to fully cover the principal amount together with the interest accrued. When this happens, logbook loan lenders could take you to court with the view of recouping the outstanding amount.
In a nutshell, while logbook loans have given individuals with a poor credit rating a new lease of life, itís essential that they go about applying for them from an informed perspective. Apply for what you can easily repay monthly and you can rest assured that you wonít have to deal with all the aforementioned problems.