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Jan 17

Common red flags to look out for when seeking a loan secured on car

Posted by:AutoMoney

Unfortunately the recession and rising living costs in the UK have led to lots of people needing a helping hand. Over the past few years many people have been turning to a loan secured on car as their favoured choice of borrowing money. This has become a popular choice for a whole host of reasons. You will typically benefit from a quick and simple application process. Moreover, you can borrow as little as £250 or as much as several thousand, and sometimes even more.

Nevertheless, as is the case when looking for any type of loan, you must assess the lender carefully. Sadly it is not uncommon for there to be companies who are not credible and those who look to manipulate the borrower as well. But, how can you ensure you do not fall victim to these lenders? Read on to discover some of the common red flags you should be looking out for and consequently avoiding.

Regrettably one of the big warning signs is when a logbook loan seems too good to be true. At the end of the day, a lender is a profit-focused company and therefore it needs to be worth their while as well. If the repayments are shockingly low and stretched over a surprisingly long period of time you need to ask yourself why? Is there something hidden in the terms and conditions that you are missing?

Under no circumstances should you ever have to hand over your car from the beginning of your agreement. You only need to give the lender your logbook. If you fail to meet the repayment terms set in your contract, this is when the lender has the right to take your car from you.

In addition to this, you also need to ensure the company does not charge you when you want to make additional repayments. A lot of companies charge individuals when they want to contribute more than the set monthly repayments require. This is something you really want to avoid. Why should you be punished for being good at paying back what you owe? Moreover, this can be detrimental because the individual may end up spending the money if they have to hold on to it for a while before being able to contribute it to the loan.

Another major red flag is when companies have a negative reputation. Take the time to have a quick look online and see what previous customers have had to say about the log book loan they received. If you find a lot of people are expressing dissatisfaction then you know to stay away from the company because you don’t want to go through the exact same thing.

If you pick up on any of the red flags that have been touched upon in this post you know to stay away from the lender in question and look elsewhere. After all, a loan secured on car may be an extremely popular option, but it is only going to be beneficial to you if you choose wisely.

Summary — Disaster can strike when you seek a loan secured on car from a company that is not credible. This article points out some clear red flags which you should be looking out for to ensure you don’t end up with a troublesome logbook loan on your hands.

Borrow with confidence

Borrow with confidence

We are PROUD MEMBERS of The Consumer Credit Trade Association. AutoMoney were forerunners in the creation of The CCTA Lending Code of Practice and we adhere strictly to its principles. Click here to view. ALWAYS MAKE SURE THE LENDER IS A MEMBER.

350.5%APR Representative
Representative example: Loan amount £1000. Duration 18 months. Repayable by 16 monthly repayments of £170.42 and one of £198.42 (includes Bill of Sale registration fee of £28) commencing two months from the date of the loan. Total amount repayable £2925.14. Rate of interest 187% per annum fixed. Representative 350.5%APR. LOANS ARE SECURED ON YOUR CAR. The vehicle may be repossessed if you do not keep up the repayments.