When it comes to types of loans, there are loans to fit all shapes and sizes, all peoples’ circumstances between the rich and people not so fortunate. One of the more prominent types of financial arrangement that are mentioned most often in the current climate are the ‘bad credit loans’.
What is a bad credit loan?
A bad credit loan is a loan that is designed to cater for someone who has a bad credit history, someone who has missed payments, or has previously been through hard times financially.
Now, a bad credit arrangement isn’t limited to one type of finance, there are several different types coming in all different shapes and sizes.
There are pay day loans, which are short term cash arrangements that are intended to provide an important sources of quick cash until pay day.
There are also guarantor loans, that are designed for people that have a guarantor who trusts them enough to honour their repayments in the event of a default or non-payment.
There are also logbook loans available to individuals who have bad credit ratings, but are comfortable with putting their car forward as collateral in order to secure the loan.
What Are The Advantages & Disadvantages of Logbook Cash Loans?
This is an important question with an even more important answer.
The advantages of logbook loans are few and far between, it is an expensive financial product, and is only to be considered in the event that you are in an emergency and you are absolutely certain that you need a loan of this nature.
This is because of some key facts:
1 – The interest rates are very high on logbook finance, and the repayments large.
2 – In the event you default on the loan itself, you will lose your vehicle if you are not careful
3 – You can only borrow up to 75% of the LTV of your car on one of these loans, meaning that you should be careful that the lender or broker will off you the money you need in the first place.
So, to address the initial question of this article “Is getting a logbook cash loan a good idea?” in many cases the answer is “No” however, if you absolutely need a loan, and this seems like the only available option to you, then, used responsibly a loan of this type could be OK.
It is advisable that you look for alternatives, because there are cheaper types of finance arrangement out there available to most people, you should check if you qualify before applying for logbook finance.
The qualification criteria tends to be broad for this kind of arrangement with most people with a car free of finance being perfectly acceptable as collateral.
Explore other options before taking out logbook borrowing though.