What are the Risks of a Logbook Loan?

All lending can be risky. An unsecured loan will just affect your credit rating, but a secured loan is more risky to you. A logbook loan is a secured loan where you will put up your vehicle as collateral. This means that if you do not repay the loan, the vehicle will be taken and sold to pay for it.

If you feel confident that you can pay back the loan, then you may not see losing your vehicle as a risk. However, you never know what might happen in the future and so it could be a really big risk. You may lose your source of income and then if your vehicle gets taken you will not have the either. If you have lost your job and therefore are unable to repay the loan, losing your vehicle will really reduce your options with regards to where you can get a new job. You may not lose your income, but may find that you have other expenses and just do not have the money left to cover the loan repayments. Again this would lead to the vehicle being repossessed and you will have no vehicle to use.

Risks of a Logbook Loan

If you cannot repay the loan you will also get a bad credit record. So not only will you have no vehicle but it will be very difficult for you to borrow money again. This could end up making life very difficult for you.

This means that when you are deciding whether to take out a logbook loan, you need to consider the consequences of not being able to pay it back. If you rely on your vehicle for your job, then losing it will mean losing your job and that is a huge risk to take. There could be alternative ways to borrow money that will not be such a risk.

All loans have some risks associated with them If you cannot repay any loan you will get a bad credit record, you may get a visit from the bailiffs and you will get the item secured on the loan taken from you. You should always think hard before borrowing money. With the logbook loan you will be using a vehicle as collateral so you need to think carefully about how you would manage if that vehicle was repossessed and whether it is worth risking that for the sake of the loan.

Julia Written by: