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Reasons to Avoid Using a Logbook Loan

Logbook loans are quick loans, somewhat similar to payday loans, but secured against a car owner’s logbook. The result is that car owners might be able to obtain loans relatively easy and with slightly better terms, but then risk having their car repossessed.

If you have stopped by the website of a company offering logbook loans, you will probably have noticed that they do a great job of selling their product. Quickly browsing through the pages, and looking at all those pictures of smiling faces and stacks of cash, you get the feeling your financial worries are just about to be over.

Don’t be fooled! You should avoid logbook loans like the plaque. The reasons why are plentiful, but I will stick to one. I think you will agree that it is all the reason needed if you value your financial freedom.

Obscene Interest Rates

If you take the loan, you will be forced to pay a very high interest rate. It might be slightly lower than the rate you will face taking a payday loan, but, especially, considering this is a secured loan, the interest rate is absolutely ridiculous.

Logbook loans are almost always associated with an APR above 400 percent. Sometimes looking at a number like this doesn’t fully convey just what a bad deal you are signing up for.

Let’s assume you let the loan run for two years. The interest rate results in you paying more than double the amount you are borrowing. Think about it again. Without doing any work and with security in your car, the company charge you twice the amount you borrowed!

Unless you are facing an acute emergency and have no other choice, log book loans are not the answer, and even in that case you would do well to find cash from another source. Making use of this secured loan product will only postpone your problems, in the end making them worse.

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