Are logbook loans for everyone?
There is a general belief that logbook loans are for a select few. If you look at it from the spectrum of good versus bad credit score, this assertion might actually hold water. However, while logbook loans are predominantly applied for by individuals with a poor credit history or those who have a history of arrears, it would be incorrect to blankly state that they are meant for a specific group of people. Anyone out there can apply for a logbook loan irrespective of their credit score status. The only limiting factor especially for individuals with a perfect credit score has to do with the high interest rates associated with logbook loans.
No doubt, the highest percentage of individuals that apply for logbook loans are those that have a poor credit score, a history of arrears or even CCJs. These are men and women who for one reason or the other were unable to honour credit agreements in the past and as a result ended up worsening their credit score. They are also men and women who for circumstances beyond them such as incapacitation or loss of a job couldn’t service their existing loans hence leading to a poor credit rating. While such individuals have become synonymous with logbook loans, it would be fallacious to wholly state that logbook loans are entirely meant for them.
While on the outset it might seem as those with no credit history to their name would have a field day getting approved for a logbook loan, that is not usually the case. Ironically, in the financial world, having no credit history to your name is just as worse as having bad credit. In other words, an individual with no prior credit history will experience difficulties applying for a personal from a high street bank or even a licensed lender. The thinking by lenders is that they have no way of discerning financial responsibility and therefore deem such individuals as high risk.
Strange isn’t it? To such individuals, logbook loans might be the only option considering that credit checks carry less weight. Such individuals apply for logbook loans irrespective of the high interest rates with a view of building a credit score from scratch. In fact, there are instances of individuals who apply for V5 loans not because they need the money but because they are keen on building a credit score from scratch. A person can apply for a loan as low as 500 pounds for the very purpose of building their credit score.
In other circumstances, it’s not uncommon for individuals with a perfect credit score to go for logbook loans because of ease of application and faster approval. Rather than go for a loan from a high street bank and wait for a week or so before receiving money they urgently need, they would rather go for a logbook loan which in many cases is approved within 24 hours.
In light of the above, the assumption that logbook loans are entirely for those with bad credit is not true. The fact of the matter is that anyone can apply for logbook loans and different people go for logbook loans for different reasons!