1. Logbook loans can be compared to mortgages by a measure. They are secured loan where an asset you own are held by the lender for the entire loan period. The car is used in a logbook loan as security during the loan period. Just as in the case of mortgages, default means losing your asset. The lender holds the right to sell the asset and recover the loan balance. The only difference is that in a mortgage, the borrower does not get the money but the house at the end of a loan period. In the case of a logbook loan, the borrower gets the money instead.
2. When seeking a logbook loan, you need to ensure that the car you intend to use for the loan is not attached to another loan. The car needs to be free of any form of loan to enable you borrow cash against the car. In case there is a loan attached to the car, the lender will hesitate to lend you the money. It is only in special cases where you want to payoff the previous loan balance which may be small in amount that you can get a lender to offer you the loan money.
3. A proper budget set in place before taking up the loan is vital. The budget is aimed at helping you plan your finances in order to accommodate monthly payments. Only when you are sure that you will manage to make the payments comfortably, you should make an application for a loan. If you are unable to make timely payments or when you feel that you will be strained financially paying for the loan, it is unwise taking up a logbook loan.
4. An individual’s credit history does not have much of an influence to borrowers taking up logbook loans. Whether you have a good, poor, average, or no credit history; you can get a logbook loan. All you need to show is the ability to pay back the loan as required. Having proof of payment is essential when you want a logbook loan. It is a loan type that accommodates all sorts of borrowers.
5. Caution when selecting a lender is vital. You need to be sure that you have selected a lender who is a member of Consumer Credit Trade Association (CCTA). Such lenders are governed by laws that they must abide by. This makes them reliable and trust worthy. They adhere to certain lending practices which dictate the course of action that they take up. In case of trouble with the lender, you can attain assistance from the governing body. You do not need lenders who are unregistered since these are risky lenders.