One of the most common complaints about logbook loans is the high interest rate. Despite the steep rates and hefty fees, however, more and more borrowers in the UK are turning to the loan product for quick cash solutions to a variety of financial problems. This is understandable considering that the loan is quick and easy to avail. In fact, more lenders are now promising same day approval for applications to lure customers. But before you resort to the loan for any of your financial needs, it’s important to understand the true cost of the financial product.
Logbook loans are advertised with a promise of quick cash. Even if you have a history of ccjs or defaults, you are still eligible to apply for the loan. In exchange for this privilege is the steep interest rate.
In general, logbook loans have a representative APR of 400%. It may be higher or lower depending on your lender. If you want it cheap, it follows that you should look for a loan with the lowest APR available in the market. Currently, one of the lowest offers is at 180%.
To illustrate how your loan will cost, let’s say you want to borrow £1,000 for overdue bills and some medical expenses. If the interest rate is at a flat rate of 70% fixed p.a. and the representative APR is 180% and you want to repay it for 18 months, the monthly repayments will be £113.89 or £2,050 in total. As you can see, the total charge for credit is £1,050 for over 18 months. This amount includes interest rates and related charges or fees.
Compared with other personal loans, logbook loans really are expensive. But because it’s quick and easy to get approved, the financial product remains a viable option for many borrowers. And if you do decide to go this route, just remember that there are consequences when you can’t repay the loan back. Click here for more details on logbook loans.