Logbook loans – Are these a safe financial option?
Time and time again the first question to pass from a potential client’s mouth is “Are logbook loans safe?”
Well, are any loan products safe? And what do you mean by safe? There are many products out there that have a form of collateral to protect the financial institution giving the loan. Think of a tenant guarantor loan. Here someone signs surety the loanee. So in other words, should they default the guarantor is eligible to pay for that loan instalment. In the case of a logbook loan, the collateral is your vehicle.
That said, there are companies out there that will take advantage of naïve customers, especially those who do not know enough about the product and are desperate. They will try to exploit these people in order to make money.
Unfortunately, logbook loans do have a bad name although this is something that is getting better as more people realize that they need to go to reputable institutions when getting themselves a loan product of this type.
A decade or so ago, many logbook loans had terrible terms. Often these were simply not financially viable for the people taking them out and they ended up losing their precious vehicles. This can still happen today if you are not careful or if you go to some backyard financial dealer. And we use the word financial very loosely in this regard. ‘Loan shark’ is certainly a term that is far more acceptable.
A word of warning… these people still exist and it is incredibly important that you take note of all the terms and conditions of any loan contract you might be willing to sign. Pay particular attention to the fine print. Often, restrictive clauses are hidden here. Once you sign, you really have no recourse to fall back on.
What about us?
Well, we believe that without customers we are nothing really. That is why we go out of our way to offer logbook loan products that adhere to a strict set of rules, policies, and guidelines administered by various loan authorities. We want to help those people that have money problems but more specifically, those that have a poor credit rating. High street banks certainly won’t help and from time to time you will need loan products.
What do you need to check when taking out a logbook loan?
When you decide to take a loan product from a lender that might not be a high street bank, there are a number of questions that you should ask yourself each time. In fact, should you choose to use one of our loan products, we would expect you to have asked these questions as well.
Who am I lending money from?
It pays to do some research before lending money from anyone and we include high street banks in this equation. Go online and find out what you can before signing any contract. Word of mouth or even reading reviews can give you a very, very good idea of how a company operates. Check their websites as well. Are they professional? If the company uses their own money, chances are that the interest rate will be lower than a company that has to lend money to lend you money. In fact, rather steer clear of these operations.
What are the repayments and can I afford them?
Before you sign a contract, have the representative from the company confirm to you what the monthly instalment will be and whether it can change if the interest rates go higher. Once the monthly instalment is confirmed, ask yourself if you can afford it each month. In fact, if you do not have a monthly budget maybe it is time you draw one up to help to determine if you can indeed afford a loan or not.
How do the staff come across?
You can tell a lot about a company by the way their staff operate. If they are slack and lackadaisical, the chances are that the rest of the company is like that as well. Do you want to owe a company money that might not even remember that you have paid them? Rather look for professional companies to deal with.