Thursday, 10 April 2014

Is a Logbook Loan the Best Short Term Loan Option?

If you are thinking about taking out a short term loan it is probably a good idea to look at logbook loans as one of the options.  They are quick and easy to arrange and if you work them out right can be quite cost effective.

They aren’t cost effective if you keep the loan for a long period of time because the interest rates add up, so you pay back a lot more than you borrowed in the first place.  That isn’t always particularly ideal for some people.

Of course when you take out a logbook loan you need to have a car to use as security for the loan.  Without a car you aren’t going to be able to raise any money because you need to hand over your V5 document to the lender in order to take out the loan.

What other options are there?

One of the cheapest ways to borrow is to use 0% finance credit cards.  There are good deals out there that offer up to 2 years interest free credit.  If you pay off large chunks of the debt in this time it is a very cost effective way of borrowing.

Of course if you don’t have a strong credit record then it may be difficult to be accepted for a credit card.  Again that’s why logbook loans are so popular, you don’t have to go through a credit check and other criteria are used by lenders to make a decision on whether to loan to you or not.

if you own a property you may be able to secure a loan against that property, but again as with logbook loans you need to be careful because you are putting an asset you own up for security.  If you default on payments you could face losing that asset and if it is your home or car that may cause you serious problems in the long term.

Always speak to a debt advisor if you are thinking about taking out a loan to consolidate debts.  Citizens Advice are the best people to speak to in the UK.

It is advised not to consolidate debts with high interest loans, you could get into debt problems that can spin out of control.  An advisor will be able to set you in the best direction if you are having difficulty.

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