V5 loans, or logbook loans, as they are also known, are one of the most popular financing options on the market. Depending on your needs, they may be incredibly advantageous, or perhaps they are not the best option for you. Would you prefer a similar alternative? Let’s take a look at logbook loans, as well as four alternatives and see what advantages they have, what disadvantages they bring to the table. To help you make an informed decision about logbook loans, there is also a great article published on www.LogbookLoansOnline.net to help you with any further questions you may have.
First up, let’s talk about logbook loans. What can they offer a borrower, and why should you get one, and not opt for an alternative? But also, what should you be mindful of, and what could turn you off them?
PRO: If we’re counting advantages of logbook loans, we have to mention the large amount of money you can get, compared to unsecured loans. You also benefit from the fact that the loan is already secured with your car, so you do not require to present other forms of security, such as an excellent credit score, or pay an exceptionally high interest rate to cover for a potential loan default.
CON: In terms of CONs, we have the obvious risk of losing your car, as well as the fact that the interest rate is actually pretty high, especially compared to other secured loans, such as mortgages. Affordability may be in question so make sure you check out a loan calculator.
And now, the alternatives. What are the pros? What are the cons? Which option – if any – is better than a logbook loan?
Peer to peer loans
PRO: The main advantage of peer to peer loans is the fact that you do not need to go through traditional financial institutions to get them. Like the name says, it’s a loan you can get from your peers, on a special platform dedicated to these transactions. The deal you strike with your lender concerns you and you alone.
CON: You are more or less at the mercy of the available lenders. It is up to them to choose whether or not to offer to support you by lending you money, and unfortunately, you may still need a good credit rating in order to get money, or even secure it with one of your assets. A peer to peer loan does not mean you get a loan without offering security to the lender.
PRO: Payday loans are unsecured loans, so they have the advantage of not requiring an asset. Unlike logbook loans, you do not risk losing anything, so rest assured that your vehicle is safe. They are also quite quick to process and very easily accessible, as there are numerous lenders available online or on the high-street, so even if you may not get accepted at all of them, someone will lend you the money you need.
CON: The drawback of an unsecured loan is, of course, the fact that you need to provide security in some other way. That will include a credit check, or an interest rate. Depending on the lender, a poor credit score may affect the amount you can borrow or the interest rate you will need to pay, which is already an inconvenience, but some companies may reject you altogether. You also need to pay attention to the repayment term, as it is often very short.
PRO: Credit cards can be one’s saving glory, because they are so very convenient and almost everyone has them. More than 60 million credit cards are in circulation in the UK, according to the UK Cards Association, so as you can guess, quite a few people are opting to put their debt on their cards, instead of getting alternative financing solutions like loans. The other thing to consider is that since you have an established relationship with the bank, you may enjoy certain perks.
CON: On the other hand, the major worry with credit cards is the interest rate, which is not at all low. You can end up paying off way more than you borrowed. That is unless you get a 0% credit card. The other problem is that you need quite a good credit score in order to be granted a credit card, if you didn’t have one before. Banks do not look favourably upon borrowers with bad credit, so they may refuse to issue a credit card for you.
PRO: The option that comes with the lowest number of risks is relying on your own savings. Obviously, the main benefit here is the fact that you don’t go into debt. You rely entirely on your own ability to save. You also do not need to mind your credit score, nor do you need to pay interest on this money, since it’s yours and you are not borrowing it. Basically, this method eliminates all of the drawbacks other options present.
CON: The issue with this is that not everyone is able to save, or can afford to save. If you are on low income, it can be next to impossible to put money aside for any major expenses, since everyday expenses deplete your entire income. Another aspect to keep in mind is the amount of time it takes to save money, and the fact that you may not have the luxury to wait that long.
All in all, logbook loans can be a great financing option, but it may not be for everyone. That is why it’s important to look at all the available alternatives and see which one suits you best.