How safe are bad credit loans and logbook loans in particular?
Many people have heard horror stories about bad credit loans and logbook loans in particular. We get asked daily about how safe our products are and if we are going to ‘steal’ money from our clients.
Instead of getting angry and let’s be honest ‘steal’ is pretty provocative, we simply educate. When it comes to loans, which one is ‘safe.’ It’s all up to the person taking out the loan and paying it back, isn’t it? They have a responsibility.
Often loans have security built into them. This comes in the form of collateral. For example, you may need a guarantor to sign surety on a loan for you. If you default, paying the instalment becomes their problem. Believe it or not, people put their colleagues, friends and even family in these tough situations.
Other loans, such as our specialty, logbook loans, also have a security measure built in. This comes in the form of your vehicle which we will own for the duration of the loan. These loans also can have a bad name from time to time, especially when unscrupulous lenders start reclaiming vehicles after just one missed payment. When first introduced to the market, logbook loans often had some truly awful terms as well as exorbitant annual percentage rates, sometimes higher than 1000%. Now don’t get me wrong, there are still loan providers that have products like that. It’s up to you to do your homework and avoid these altogether.
The thing is, often restrictive clauses are hidden in the fine print of contracts. So make sure you read everything. We however, follow rules, guidelines, and policies and below to various organisations that indeed do police us and many other lenders. All we want to do is help you. Yes, we make our money from lending but we do have your interests at heart first and foremost.
Logbook loan checklist
When you are in the market for a logbook loan, there are a few important pointers that you should be well aware of. Always run through these with each and every bad credit loan you take out.
Question 1 – What institution am I lending money from?
When starting out, find at least five loan institutions that seem to have decent loan products that would suit your pocket. Now do your research. The internet is your friend here. If any company has done someone in, the chances are that they have moaned about it. Look at their social media feeds, see what people have had to say. Don’t forget word of mouth. Ask friends or colleagues if they have heard about the company. Lastly, go and see their website. Is it professional? Find out if they lend you money using their own asset or in fact if they have to lend money to lend to you. If they have their own capital, chances are the interest rates will be far more competitive.
Questions 2 – Terms
Now that you have narrowed down the possible providers start to find out their terms. You may have to go through the whole application process if they don’t want to give you an idea based on the information you give them. We will always give you a good idea of how much we will loan as well as the repayment terms before you sign any contract.
Once you have an idea of how much a loan will cost you each month, work that amount into your monthly budget. Make sure you use accurate figures here so you aren’t cheating yourself. If you cannot afford the repayments monthly, take out a smaller loan. It is that simple. If you have never drawn up a monthly budget, here is a good guide on how to do it.
Before you sign any form of contract, have a staff member from the company confirm to you what the monthly instalment will be and whether it can change if the interest rates go higher. This is very important.
Question 3 – Are their staff helpful?
This is an area where we pride ourselves. Our staff has your interest at heart. They are genuinely interested in what you have to say as well as helping you out. Lazy staff are a dead giveaway that you probably don’t want to deal with a company, so bear that in mind when making your final pick. If you can, take note of their record keeping systems. Is it manual? Do they use computers? All of these can be dead giveaways.
Then and only then, consider signing a contract! It really is in your hands. Do your homework and you won’t be caught out.