How Much Do Logbook Loans Cost?
While logbook loans may be incredibly easy to get approved for even if you have bad credit, it's important to remember that the financial product is usually more costly than traditional personal loans. Like any responsible borrower, it's important that you know and understand the cost and the risk before going ahead with the loan.
Quick cash at a high price
One of the things that attract borrowers to logbook loans is the promise of quick cash. Whether you need cash to pay an overdue bill, meet a medical emergency or cover any other financial need, logbook loans come as highly accessible source but often at a high price.
Considering that logbook loans are basically no credit check personal loans, lenders hope to compensate for the high risks they are taking on for borrowers by increasing the interest rate. You can expect for interest rates or APR in particular to be somewhere at 400%. Some lenders charge higher interests while others hope to offer cheaper rates to beat the competition.
Understanding the interest rate
To better illustrate the true cost of a logbook loan let's say you want to take out a loan amount of £1,000 at a repayment term of 12 months. If the representative APR is at 300.3% at a flat rate of 96% fixed p.a., your repayments will amount to about £163.34 per month or £1,960.08 in total. Looking at the figures, you can see that the amount you paid in interest is a whopping £960.08 for a loan of £1,000.
Logbook loans, in short, are very costly in general. It's something you need to expect and prepare for if you think you have no other choice but to take out a logbook loan to meet your very pressing financial needs. For a more in depth study about APR, Money Saving Expert has more info for you.
Risk of Repossession
Other than the high cost, it's also worth noting that logbook loans are secured loans. This means that your loan is secured against a property. In this case, it is secured against your vehicle which means that you may lose your car along the way in the event that you are unable to repay the loan.