Have you heard about logbook loan? Okay, I think most of us never heard about this term unless you are reader from British. The logbook loan is one of the growing types of sub-prime finance in the UK. As I’ve searched on the net, there’s many sites about logbook loan but not really helped me to understand.
From wikipedia, logbook loan is a British term for a bill of sale securing a loan on a debtor’s vehicle (with the lender retaining the vehicle’s logbook or vehicle registration certificate). The structure of the loan means that the lender can repossess the debtor’s vehicle without a court order. This distinguishes it from a car title loan as used in the United States.It have gained notoriety in UK due to their often very high interest rates and potentially unfair terms and condition.
How logbook loan work?
When borrower go for a logbook loan, they will be asked to hand over vehicles registration documents which proves the identity as the owner. Then borrower will sign a credit statement and also a ‘bill’ of sale. The documents say that the borrower is the temporary owner of the vehicle until pay the full loan amount. The lenders should be registered with the law. ( MylogBookLoans.com)
Advantages and Disadvantages of logbook loan
Advantages of logbook loan
The advantage is you can get get cash even you have a poor credit rating. Although there are other types of loans that people can apply but these other loans can spiral out of control if payments are not made on time.Debt can escalate and borrowers will have to face higher interest rates. The worst thing that could happen is that the vehicle will be reposssessed.
Disadvantages of logbook loan
It is a type of secured loan. If there’s any case that the borrower was not able to make the monthly payments, the borrower can lose the vehicle. Moreover the monthly interest payments are substantially higher than you would expect if you were securing the loan with other valuable possessions like your house.
( Logbookloan4u )
After reading and writing n, I get the clear view about logbook loans. It is a secured loan and we need have an asset to apply the loans. I don’t know if in Malaysia have the type of that loans that legal. As I know most of them get loan from loan shark or known as ‘Along’ which is a lender from criminal gang. Maybe this type of loans could be introduced to our country too..