Are All Logbook Loans Equal?

The logbook loan is a type of secured loan that puts your car as collateral. Its popularity has increased recently due to its relatively tolerant screening process. For people with bad credit histories, the logbook loan can be one of few solutions to a financial problem.

While the basics are the same across all logbook loaning companies, not all logbook loans are equal. If you’re interested in applying for a log book loan, make sure to take these three tips to heart before entering into a contract:

Read the Fine Print

With the dramatic increase of people facing financial difficulty, others looking to take advantage by unethical means grow by the numbers. Some logbook lenders abuse the loan applicant’s desperate situation with an improbable payment schedule that would put an individual into further debt.

Watch out for charges that could add up such as postage charges for every day when a payment is late. Getting fined on late payments can also be a source of contention.

Additionally, contracts will also state the rights you give the lender over your car. There have been complaints of loan providers breaking and entering into a person’s property in order to seize his vehicle. Sometimes missing just a single payment is enough grounds for repossession.

Regrettably, people overlook reading into contracts in detail so they unknowingly put themselves at the mercy of opportunists. The contract that you sign will be what would define your business transaction; so read and understand the fine print before you place your signature on the blank.

Find a Reputable Logbook Loan Company Representative

While log book loans should make borrowing money easier, loan providers still have a selection process in order. Beware of representatives who offer unscrupulous services just so you can get approved for a loan. These activities include forging of certificates and bank statements.

In the end, it’s still up to you and your income to pay back the lender with interest. If you default on payments, you will lose your car.

Compare Rates

Probably the primary factor most people consider when selecting a logbook loan company is its APR rate, or Annual Percentage Rate. The APR is how the lender earns money and logbook loans can charge up to 400% APR.

Ask whether interest rates are charged on a yearly, monthly, or daily basis. Sometimes the total payment that you make for a low daily interest rate could be higher than the higher-quoted annual rate.

Also consider the value offered by the lender for your vehicle. Not all companies give a loan amount of 50% of your car’s value; some are known to give 60%. If you need a considerable amount of money, it’s best to do your homework and not settle for the first logbook loan company you find.