Mar 16 2017
Today’s loan market is a crowded place and borrowers are spoilt for choice. But when you’ve decided that logbook loans are your preferred line of credit, we’ll give you a few things to think about to help you pick a good, responsible lender.
Logbook loans are one of the most widely used methods to get a fast cash injection. The format is simple, with all logbook loan lenders using your car as the security for your loan. So while it’s easy to get this type of loan if you’re a car owner, just like other loan types, some deals are better than others.
There’s been a rise over the last few years, in a number of people having day to day financial difficulties. At the same time, there’s been an increase in the number of small, opportunist and often unethical logbook loan companies. This minority of companies will offer a quick loan, but will often use sky-high interest rates, big fees and sly tactics for dealing with any late repayments.
So let’s look at how some logbook loan lenders like to operate and give you some pointers on what to look out for and what to avoid. We’ll then look at all these things to see how Car Cash Point would be a better option for you.
Check the interest rate
Interest rates can vary wildly depending on the lender. This is true for all types of loan, whether they’re secured or unsecured and from a bank, building society or any other source. Even logbook loan rates can differ greatly.
Some lenders can charge as much as 450% APR for their logbook loans. And although that seems particularly high, it’s not unusual to see. This kind of figure makes paying back your loan far more difficult, more expensive and longer to do. You should always check the lender’s APR interest rate first, then compare it against the rates of other lenders. It’s surprising just how much you could save, just by doing this simple check.
How’s your credit?
For every loan applied for, it’s usual for the lender to undertake credit checks each time. This background check tells the lender whether or not you’re creditworthy and have a high probability of full loan repayment. It’s standard practice for the majority of lenders to do these checks, but that might not be good news for you.
If you’ve had credit problems in the past, such as a CCJ or bankruptcy, this will be enough for the lender to deny your application outright. This hardline approach is used by all money lenders, including some logbook loan companies. If you know you have bad credit now or have had problems in the past, there is another alternative, so make sure you find a lender that does not use credit checks.
Hidden fees & charges
Often the cause of financial problems getting out of control, lenders hidden fees and charges can be a borrower’s downfall. As with any agreement that requires a signature to get started, it’s advisable to read the small print before doing so. But it’s not so much the fact that details are buried in tiny terms and conditions, but that many lenders do not tell you about them up front in the first place.
Hidden fees can be anything from more obvious things like a charge for a late payment to charging you for text messages, phone calls and letters. All of these can make your repayments get bigger and carry on for longer. A responsible lender will always be upfront with you about fees and charges, but if nothing gets mentioned, ask them during the application process.
Paying your loan off early
If you find yourself in a position to be able to repay your loan in full before the end of your loan term, it makes sense to be able to do so. However, not all lenders see it that way. The majority of lenders like to impose a minimum period, usually three months, before you can pay your loan off. So even if you’re able to, you won’t be allowed to, meaning you’ll have to incur further interest charges for no reason.
Some lenders will even add an amount of interest to your current outstanding balance when you request early settlement. This is plainly just a penalty for wanting to settle early as it will prevent some lenders from making maximum profit from you. Again, always ask about this before you agree to your logbook loan and choose a lender that won’t penalise you for wanting to settle your loan early.
Similar to paying your loan off early, some people may find a change in their financial circumstances allows them to pay more off their loan once in a while, beyond their agreed repayment amount. If you find you’re able to do this, it makes sense to have your future interest lowered accordingly. It might only be a slight change, but every penny can help.
Every logbook loan lender should allow capital overpayments against the original loan amount. However, not every lender will adjust their level of interest accordingly, instead keeping it at the original rate, even though you’re able to pay more off. Some lenders will also have a limit as to how many times you can make overpayments as well. Both these things should be made clear at the loan application stage, but if you make overpayments, you shouldn’t be charged the same rate of interest.
Payments to suit you
When you take out any loan, it marks the start of a fairly long repayment schedule that you need to maintain. Everyone’s finances and budgets are different, so it’s helpful to know exactly how much you’re paying and when you’re paying it. When you know this, it makes things a lot easier to manage, so choose a lender that will allow weekly or monthly payments that fit with your own finances.
No lender should give you an unrealistic repayment schedule that will put you in financial difficulties. If they try to, do not accept it. If you’re not able to specify terms that suit you when you apply, find another lender who will let you choose.
An easier alternative
At Car Cash Point, we like to do things differently. We’re the cheapest and best value providers of logbook loans in the UK. We’re also authorised and regulated by the Financial Conduct Authority for the conduct of consumer credit as well as a member of the Consumer Credit Trade Association and therefore is fully compliant with its ‘Code of Practice’. All that simply means that we’re an ethical and responsible lender.
Looking at our list of what to look out for when choosing a logbook loan lender, Car Cash Point can offer you a refreshing alternative to those unscrupulous lenders we talked about earlier. How are we different? Well, let’s take a look:
Low interest rates: Being the best value logbook loan lender, our APR interest rate is capped at a maximum of 230%. This can be almost half of other lender’s rates and because of our lower rates, we will never be beaten on price.
No to credit checks: Unlike other lenders, Car Cash Point do NOT carry out any formal credit checks. Your application will have no effect on your credit score whatsoever. And if you have credit problems or have been refused credit in the past, don’t worry – we should still be able to help you.
No to hidden fees: Car Cash Point never have any hidden fees or charges. Any fees are made clear to you upfront, so you don’t get any nasty surprises. Plus, we are the only lender in the UK to offer a price guarantee – if you find a cheaper quote from any other UK logbook loan lender, we’ll beat it by 10%!
Yes to early settlements: We don’t believe in penalising you for paying your loan off early. Car Cash Point is the only UK logbook loan lender that lets customers settle their loan at any time – 100% penalty free, even after just one day.
Yes to overpayments: Car Cash Point is the only UK logbook loan lender that allows capital overpayments and then charge reduced future interest on the lower balance. We also have no restriction on the number of times you can make overpayments.
Repayments that suit YOU: To make things easier for you, Car Cash Point is the only UK lender that offers you a choice of either weekly, fortnightly, four-weekly or monthly repayments. Giving you this choice lets you manage your budget according to your finances.
Remember, it’s not how much you can borrow, but how much you have to pay back in total that’s key.
So if you’re looking for a flexible, great value logbook loan, visit Carcashpoint.co.uk or call 0333 220 4419 and speak to one of our expert advisors today. We’ll never be beaten on price or service!