Securing your car against a loan and you can still use the car
Heard this new type of loan on the radio today and really wondered how it works. Sorry if i is a dumb question but cant figure it out?
Do they;
Give you cash "payday type" loan up to value of car and you drive around in it and then hand it to them?
Effectively remortgage your car and "hire" your car from them?
With cars losing a lot of value every month, their guarantee is getting small every month whereas a house guartanee is getting larger every month. Then there is the question of having an accident, who dows the legal owner become? Is this a new thing, as I havent heard of it before
Can you explain how it works?
Edited by Dynamic Dave on 07/11/2008 at 18:53
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Mods please remove abarth 500 as I could post without putting a car?
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Mods please remove abarth 500 as I could not post without putting a car?
Sorted.
In Discussion you need to choose either a "category" from the drop down menu, or a "Make / Model" - generally unless it is car specific, choosing from the "category" menu is sufficient enough.
DD.
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Google "Log Book Loan"
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I see one company is offering the competitive of rate of 437.4% APR - bet they were not fussed when the base rate tumbled 1.5%!
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Thanks BP, ouch nearly 500% APR!!
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They lend you money secured against the value of your car. Those that I've seen all appear to be promoted as a quick fix for temporary cashflow difficulties and in that sense are similar to payday loans.
For precisely the reasons you suggest (i.e. diminution in value, risk of accident etc) they typically charge a monthly rate of interest that is comparable to the annual rate on your average credit card. Some of the firms advertising "logbook loans" in the tabloids quote APRs of over 400%. That's cheaper than a payday loan, but such a comparison is like comparing flame temperatures.
The lenders would no doubt justify this on the basis that as well as the risk to their security through depreciation and so on, they are lending to people who are already pretty skint through misfortune or previous poor financial decisions, and thus have a much higher risk of default.
And when that default does happen, the suck- sorry, borrower is left with no car and a lovely residual debt to which has now been added default charges and all sorts. Oh, and they're still broke.
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.......whereas a house guartanee is getting larger every month.
What planet are you living on?
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Quickly read some web based complaints thread. Scary.
Some of the people taking loans are --- well naive is too kind a word. Probably desperate for cash.
Selling the car seems a better option as often car is repossessed and the borrower ends up owing £000s in unpaid interest..
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