Are you struggling to make it to payday? Are you constantly worrying every time the phone rings or the post arrives that you’re going to be dealing with pushy debt collectors and scary final demands? When money is tight and it feels as though there’s no way out, may people turn to logbook loans as a quick, convenient financial fix.
These logbook loans require car owners to pass the ownership of their vehicles to the lender and in return, they get a loan – complete with high interest! You get to keep your vehicle while you pay back the loan, and it becomes your vehicle once again when you’ve paid off your loan in full.
Sadly, what many motorists don’t realise, is that this quick fix is often only the start of their financial problems. Here we’ll explore logbook loans and 4 reasons why motorists should avoid them at all costs.
Remember, if you’re struggling with debt, don’t panic. Get your head out of the sand and reach out the friendly team at creditfix.co.uk. With the latest information and advice on debt, you can get your finances back on track, today!
No credit checks required
It’s easy to think that this is a good thing, especially if you’re in a financial bind. However, the lack of proper checks means that anyone who can prove they own their vehicle can take out a loan against it. This kind of availability means there is nothing in place to prevent people who are already struggling with debt, from spiralling further. With high-interest rates – we’re talking around the 500%-mark, additional fees and high repayment plans, it’s a recipe for financial disaster.
Hidden fees are everywhere
Logbook loans often come with hidden fees and rising costs, something which many people neglect to check for or consider when they sign their car ownership away. Even if you want to pay off your debt early, you could be facing a huge fee. And as you can imagine, the fees for late repayments can plunge you further into debt.
Defaulting can cause more problems
If you default on your car repayments, then this could create even more issues. In the event of continuous payment defaults, the lender has the right to repossess your vehicle and even sell it on. You may even be charged for the costs of repossessing and selling your own vehicle! It sounds unfair, but when you sign up to a logbook loan you really are at the mercy of your lender.
It’s unlikely that you’ll pay it back
Typically, the type of person who takes out a logbook loan has other debt and financial issues hanging over them. And if you already have money problems, then it’s unlikely that a logbook loan will fix them, and you can return to a financially healthy life. You’re more likely to make your financial situation worse and lose your vehicle. If this sounds familiar, it’s much better to reach out to a debt advice firm like Creditfix who offer helpful, non-judgemental advice for anyone who is struggling with debt.