It is often quite easy for people to look at the short term loan industry and dismiss it straight away out of hand, but without knowledge of the market it it’s not always the best idea to dismiss something so readily if you don’t have the facts.
Forms of short term loan that are less in the public consciousness such as logbook loans offer a variation on the Payday loan model. You are using your car as security which in general terms means that you are using an asset to raise finance. This is a common type of financing in business, so why should it not be used for consumers looking for money for a short period of time.
Interest rates for these type of loans are generally a lot higher than other forms of loan, but that is because the loans are designed for a short period. They are not designed to be kept for long lengths of time such as ordinary car finance or nowhere near as long as a mortgage for example. The quicker you can pay one of these loans off the better.
Good logbook loan lenders will thoroughly check an applicant before they are given a loan, issues only seem to arise when lenders allow applicants to take out loans when they can’t afford them and they then have to repossess a large number of vehicles. Practices like this have given the industry a bad name in the past, but this is being remedied by the introduction of regulatory bodies which keep a close eye on lenders and ensure they follow strict guidelines.
There are always two sides to an argument when it comes to short term loans. Some might say that lenders are preying on vulnerable people who need cash fast and don’t read the small print, these people then fall into downward spirals of debt and find it extremely hard to dig themselves out. There are others who believe that loans should be freely available to all and as long as the interest rates and terms are clearly stated and the customer knows exactly what they are getting themselves into then there are no problems.
The fact remains that v5 loans should be aimed at those who need a quick injection of cash and know that they can pay the loan back quickly. There is no point paying large interest rates when you are keeping a loan for many months or even years.
If you are looking to take out a loan, it’s always best to get some advice first.