Why Logbook Loans Offer A Useful Alternative

Logbook loans or V5 loans as they’re sometimes known aren’t the most common form of short term finance because they haven’t had the publicity that other forms of loan have had, but they are a way of raising money that can be useful for some people.

It’s not that they are particularly cheap because I would be lying if I said they were, but they don’t need you to have an impeccable credit record and in most cases they won’t credit check applicants at all.

Of course the main pre-requisite is that you have a vehicle to use as security for the loan.  The loan is offered against the value of the car if it was sold at trade prices.  The lender will then lend up to 70% of that value.

Not all logbook lenders are the same

Each lender is different and they will lend at different percentages and importantly different interest rates.  It’s not the kind of market where lenders offer rates that are a few percentage points different from each other, there can be large differences.  

From searching the market, Varooma’s logbook loans are the cheapest, but check all lenders for deals and other costs that may be associated with the loan.  Just because one lender is cheap it might mean that the company are recouping it’s costs in other areas by charging additional fees.

 These loans offer a good alternative because they are quick, easy to set up, are available for people with bad credit and are a regulated market, which is far better than a loan shark.  They are even better than a payday loan that has very high interest rates.

Better than payday

Logbook loans can also be a better bet than payday loans if the loan is for a longer term.  These loans are designed for lending money over a short period.  The interest rates are too high for it to be lent over a long period.  Logbook loans can be taken out over 2 months, which gives borrowers the chance to spread their payments, although it does mean that interest on the total loan amount will be more, the longer the loan is taken out for.

No early settlement costs

The main logbook lenders generally won’t charge early settlement fees, which unlike many other short term loans means that borrowers can repay their debt early without having to pay a significant amount to come out of the agreement.  This is advantageous to people who know they will be able to pay the loan amount back quickly and think they might need an injection of cash quite often.

Taking everything into account, V5 loans aren’t a bad deal for borrowers with bad credit ratings who have been refused credit cards or other forms of finance.   The interest rates are high, but for people who desperately need cash fast and can pay it back fairly quickly, they are a good option.