Keep Your Eyes Open When Using Logbook Loans

When you're in hurry to get some cash getting it from a bank or other financial organization can be difficult, especially if you have a bad credit rating. Because of this a lot of people are turning to other types of loans. One of them is the logbook loan.

Logbook loan allows any individual who has a car registered to his or her name, is 18 years or above old and lives in England or Wales to borrow a sum between 500 and 50,000 pounds from the lender. The loan is secured and uses the vehicle as a collateral, but the borrower is still allowed to continue using it. If, however, he defaults on the payments, the loan company, which keeps the car's logbook registration document through the loan period, can repossess the vehicle and sell it without a court order. Because of this, anyone who decides to apply for these loans needs to be sure that they will be able to pay it back.

This loan can be a double-sided sword. On one side, if you own a very valuable car, with no outstanding finance on it, you can get a very large sum borrowed. However, this also means that you are running a serious risk of losing your car if you fail in keeping up with the necessary payments.

Another thing about logbook loans that isn't so great are the interest rates. While they are still not as high as with same day loans, they are considerably above what you would pay when it comes to standard bank loans. In fact, if you, for instance, take a loan for a period one year, you could end up paying double, or even triple the amount of what you originally borrowed.

These loans can be very useful when you're in a pinch, but you must be careful with them. Especially since the lending companies can be very zealous when you fail to make a payment and can repossess your car immediately.