Are logbook loans a menace or a necessary evil?

A lot has been said about logbook loans both the good and the bad that one might be forced to ask whether they are a menace or a necessary evil. On one hand are proponents of logbook loans who believe that they have bridged the gap between individuals with a good credit score and those with a bad credit score. The proponents opine that were it not for logbook loans, thousands of UK citizens with a poor credit rating would be facing huge problems as regards availing of loans. On the other hand are logbook loan opponents who view logbook loans as a menace, an evil whose time is up and an instrument of exploitation.

The opponents view logbook loans as skewed to enrich lenders out to make insane profits. The opponents of logbook loans decry the high interest rates and the fact that there exist shrewed lenders who waste no time to pounce on defaulters and repossess their cars. Whatever, side of the argument you ascribe to, the reality of the matter is that there are three sides to a coin. There is the view of the proponents, the view of the opponents and the fact of the matter as it is.

Of course, if you’ve never had a poor credit rating, you might not be able to fully appreciate the benefits that come with logbook loans. You might not fully comprehend why logbook loans have soared in popularity over the years. You might not be fully able to comprehend why even those with no prior credit history troop to logbook loans to kick start their credit history. The truth of the matter is that there are benefits as well as disadvantages of logbook loans. However, to entirely focus on the demerits while giving the benefits a wide berth is erroneous.

Logbook loans have given thousands of UK individuals with a poor credit rating an opportunity to mend or repair their credit report. A person with a poor credit score ordinarily doesn’t get approved for a loan from mainstream lenders. Conversely, improving their credit score becomes a tall order. Logbook loans give you the opportunity to repair your credit score provided that you meet your debt obligation without default. Secondly, logbook loans ensure that you meet your financial needs first without having to deal with paper work or screening of a person’s credit score. The fact that you also get to continue making use of your car as you make repayments for the loan is something that most people find appealing.

On the flipside, logbook loans are relatively expensive. The interest rates are high and applicants end up repaying more than twice the principal amount. For this reason, opponents of logbook loans hold the opinion that the loans are used by lenders to enrich themselves. Secondly, the fact that lenders do not need a court order to repossess logbook loans is another reason opponents view it as a menace. Whatever the case, the truth of the matter is that logbook loans are beneficial as well as pose a number of risks. As to whether they are a necessary evil or a menace, it’s up to you to decide.