subject: Prevent Getting Tricked When Buying A Second Hand Car [print this page] Prevent Getting Tricked When Buying A Second Hand Car
A recent report has been looking into claims that some car owners are taking out loans guaranteed against their cars and selling them before paying off their accounts, leaving the subsequent car owners with the debts. Due to this, Trading Standards are calling for logbook loans to be banned.
So, exactly what are logbook loans and how does it all work?
What Is A Logbook Loan?
Logbook loans are a fast and simple way to take out a loan. You are able to take out bigger loans at a lowered interest because they're guaranteed against your car or other vehicle. The amount you are able to borrow all depends on the value of your vehicle. As an example - if your car is worth around 3,000 GBP, you would most likely be in a position to borrow about 2,000 pounds. It is normally around 75% of the value of your car, but it really comes down to the loan provider that you go with.
A feature that is a feature of these loans is the lender will keep the cars' logbook up until the borrowed amount is paid back.
Why Do Consumers Pick Logbook Loans?
. They are an alternative for individuals who have bad credit.
. Using a vehicle for security, ensures that it is possible to borrow significantly more than would be possible with a payday cash advance.
. Depending upon when you apply, a logbook loan will normally be authorised and payment will be received on the same day.
. As your car is used as security of your loan, your interest rate is significantly less than that of other short-term loans such as cash advance loans. The interest is approximately 10% a month compared to about 25% for a regular payday loan.
As with any sort of loan, you will find good and bad things to think about and there will always be risks. It is not a good idea to borrow any cash if you do not feel that you'll be able to pay it back.
Things To Look Out For When Buying An Used Car
. Be sure that you don't buy any vehicle without having its logbook. As the logbooks are utilised as security for the loans, if your car doesn't have one, it could mean that not only is there outstanding finance on the vehicle, it technically isn't owned by you as the loans company would have your V5 registration papers.
. Another strategy to ensure your car is up to standard, is to buy a full vehicle check. In addition to any over due finance or loans taken out against your vehicle, it will check if it had previously been stolen, been written off, had any mileage troubles or had any plate transfers etc.
So, who knows if logbook loans will be banned, but for the time being, make sure to be wary when buying an used car, and if it doesn't have its logbook, it will probably be advisable not to go ahead with the sale.
