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The Cost Of A Typical Logbook Loan
A logbook loan is an easy way of getting a loan if you own a vehicle and even if you have a bad credit history, CCJs, credit problems or been turned down for a loan / loans already.
Because of this they don't come cheap and the risk is great so be sure you know what you're dealing with, make sure it's right for you and see if there may be a better option for your situation.
It's strongly suggested that you speak to an independent financial adviser before making any decision you may regret. |
So just what is the cost likely to be?
Actual cost vary from lender to lender but typically a log book loan doesn't come cheap - rates being quoted currently are of %APR of between 350% and 480%
APR stands for Annual Percentage Rate of charge, it can be used to compare different credit and loan offers. The APR takes into account not just the interest on the loan but also other charges you have to pay (arrangement fees, document registration fees etc). APR is used to compare interest rates for borrowing. It is the total (or gross) interest you'll pay over the life of the loan and includes all charges and fees. All lenders have to tell you what their APR is BEFORE you sign any agreement - it will vary for each logbook loans lender.
The actual cost of a logbook loan will be calculated based on the amount you wish to borrow and over what period of time you want to borrow the money over. Both the total and weekly / monthly payment breakdowns should be quoted and explained before you sign any contract - make sure this is the case and that you understand and accept.
As stated, each individual lender will quote an actual representative example but to give you an idea for the average logbook loan we're talking approximately as follows:
£500 borrowed over 6 months: total repayments could be in the region of £900 to £1,100
£1,500 borrowed over 12 months: total repayments could be in the region of £3,600 and £3,800
£3000 borrowed over 18 months: total repayments could be in the region of £9,000
£5,000 borrowed over 36 months: total repayments could be in the region of £23,000
You'll see from the above that a logbook loan is not likely to offer a cheap way of borrowing money!
Each logbook loans lender may also have additional costs you'll need to be aware of and also watch out for late payment fees and early settlement terms.
Don't forget - by law, lenders MUST tell you what their APR is BEFORE you sign any agreement and it's important you remember that it can vary from lender to lender.
In a nut-shell and in our opinion logbook loans can be a quick and easy way of borrowing money - especially for those with bad credit and struggling to obtain finance elsewhere. They are however a very expensive way of borrowing money and, in view of the fact they are secured against your car or vehicle, a very dangerous and risky way of borrowing.
It's recommended you think long and hard before choosing to borrow in this way ... ALWAYS check the actual costs, ALWAYS check the terms, conditions and small print and ALWAYS consider alternatives and consult an independent financial adviser first.
Beware: All logbook loans are secured on your vehicle and a failure to make repayments could see your vehicle sold to settle outstanding balances.
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