It is easier to understand a logbook loan once you understand the phenomenon of payday loans. A payday lender essentially advances cash to a borrower who either cannot qualify for a bank loan or does not have time to do so. The borrower secures the loan with evidence of income, usually in the form of a paycheck stub, and a post-dated check made out to the lender for a sum equal to the loan and an additional fee.
There are obvious limitations to this arrangement. Borrowers cannot receive loans larger than their regular paycheck. Lenders have discovered a way to unlock the value of their clients’ vehicles and give them access to larger funds through the use of logbook loans. A car or tuck typically has a significantly higher value than most people’s paychecks. By securing the loan with a vehicle, a borrower can obtain loans for much higher amounts. These loans are particularly helpful for people whose credit rating is too low to get loans through banks.
A logbook loan is preferable for many possible reasons. Once you receive these funds, they are not restricted as many bank loans are. For instance, you frequently cannot use bank loans to pay off debts. Borrowers can use logbook loans for nearly any legal purpose. These loans sometimes have lower interest rates than payday loans. By acquiring such a large loan at a lower rate, a borrower can avoid having to return for another loan every two weeks.
In order to finalize logbook loans, borrowers must establish that they own a vehicle outright by presenting the vehicle registration certificate. They leave this document in the lender’s possession when they receive the money. Borrowers can continue to use their vehicles just as before. The lender retains the registration in case the borrower cannot pay back the loan. In such a case, the lender can repossess the vehicle instead of waiting for payment.