What are the benefits and risks of taking a logbook loan?

If you have never taken a logbook loan, chances are that you are wondering why you should consider taking them. I mean, what is it about a logbook loan that is attractive as compared to a standard bank loan? These are some of the questions that people ask themselves. However, it’s imperative to note that logbook loans are essentially designed for people with a low credit score and who can never be approved from high street banks. It is designed to help such people get access to the much needed financial help without someone breathing down on their neck based on the status of their credit report.

What is a logbook loan?

As the name suggests, a logbook loan is a cash advance that is secured against a person’s car. A logbook is a legal document that proves ownership of a car. Once you apply for this kind of loan, you surrender your car logbook to your lender until such a time you satisfactorily complete making payments for your loan. The good thing is that you continue driving your car even though your lender is the temporary owner of your car. The period of repayment, mode together with the money you will be paying monthly or weekly is agreed upon before you take out the loan.

Benefits of logbook loans

Application process is fast and simple

Applying for a logbook loan is not as taxing as is the case with conventional loans. No screening is required, you don’t need to state reason as to why you need the loan and there is no bulk of paper work that is required. You simply need to avail your car and your lender will ascertain whether the value of that car is sufficient enough to accord you the kind of loan you need. Once that is ascertained, your loan application is usually approved within the same day.

No credit checks are required

What prolong loan applications in high street banks are of course the credit checks, the paper work and the ascertainment of additional collateral. This is not the case when it comes to logbook loans as all you need as collateral is your car logbook. No credit checks are done and as such it doesn’t matter whether you have bad credit or not. So long as you have a car that is in good condition and which has no financing attached to it, you are good to go.

Cash is availed within the shortest time possible

Unlike conventional bank loans, you get access to your logbook loan within the shortest time possible. It is the reason why this kind of loan is preferred during emergencies. The approval of your loan can be done within 24 hours and you will have your problem sorted out.

Are there any risks associated with logbook loans?

The uppermost risk is of course the probability of losing your car to your lender in the event you fall back in repayments for a couple of months. The bill of sale document you sign makes your lender the temporal owner of your car and therefore in the event you fail to make payments as agreed, they can sell your car and recover their loan amount together with interest.