If you need a fairly large sum of money and you own a vehicle, you may consider logbook loans. What is a logbook loan? It's a secured loan where you put your car up as collateral in exchange for a sum of money you pay in instalments. You hand over the ownership of the car to the lending company until the loan is completely repaid.
If you're asking yourself " Can I lose my car with a logbook loan?", the answer is yes. If you fail to pay several of the instalments, you do run the risk of having your car repossessed. That is why it is of overwhelming importance to be completely aware of the circumstances surrounding signing for a loan like this, as well as making sure you can afford it. For that, you may need to know how to use a logbook loan calculator, so let's talk about that.
What Do I Need to Know Before Using a Logbook Loans Calculator?
There are numerous very important details to figure out before deciding to take out logbook loans. Can you afford one? What information do you need to have in order to use a logbook loans calculator?
How much do you want to borrow?
First, you have to decide how much you need to borrow. Since you're looking at a secured loan and putting your car up as collateral, you probably intend to get a fairly large amount of money. Make sure that the amount can be covered by logbook loans and that an alternative loan is not better. Depending on how much you need, logbook loans may not be worth it.
How much is your car worth?
The amount of money you can get with logbook loans depends entirely on the value of your car. The newer and nicer your car is, the higher the loan amount will be, so gauge your expectations accordingly. It is recommended that you get the value of the car assessed by an independent third party in order to receive a fair assessment and for both parties to be satisfied.
How much money can you get?
Keep in mind that while the loan amount depends on the value of your car, the lending company will not offer you a loan equivalent to the vehicles' value. You will receive a percentage that is higher or lower, depending on the company. Some lending companies offer as little as 50% of the assessed value, so be prepared to receive less than you were expecting.
How much interest will you pay?
It is well-known that logbook loans come with a very high interest rate, sometimes as much as 400%. That means that you can expect to pay much more than the original amount you borrowed and that you will pay more and more the longer you have the loan.
For how long will you take the loan?
Taking our previous point into account, obviously, the loan period is a very important piece of information, because it decides how much you will ultimately have to pay. Terms differ depending on the lending company you decide to use. If you go for the full term, you can expect to pay interest that is around double the amount of your original loan.
Please be aware that you are within your legal right to pay the loan early, even if you agreed to a longer repayment term. So, if you can afford to pay and finish the contract early, while there may be a fee, you are legally allowed to end early and thus, cut back on the amount of interest your loan acquires.
How much will your repayments be?
The amount of each repayment will be calculated with the help of the logbook loans calculator.
How Do I Use a Logbook Loans Calculator?
- The easiest way to figure out how much you're going to repay is to use a logbook loans calculator. This is an online service that allows you to input all of the relevant information we discussed earlier (how much you want to borrow, for how much time, etc.) and automatically calculates the amounts for you.
- Most logbook loans calculators will ask you to put in the loan amount and repayment term, at the very least, and produce the amount you need to repay every week or month. These are usually ones from lending companies that apply their specific interest rate without you having to input it.
- Other ones that are more complex and independent ask for the interest rate as well and produce information like how much it would cost over different periods of time (like 1 year, or 3, or 5), what your total repaid interest will be, etc.
Here is a mock-up result based on some values chosen as an example:
Loan Amount : 3000
Interest Rate : 300%
Loan Term : 60 months
|1 year 12 months||2 years 24 months||3 years 36 months||4 years 48 months||5 years 60 months||10 years 120 months|
|Total amount borrowed||3000||3000||3000||3000||3000||3000|
|Total amount to repay||9664.08||18085.44||27008.64||36000.96||45000.00||90000.00|
|Total amount of interest paid||6664.08||15085.44||24008.64||33000.96||42000.00||87000.00|
|Interest rate (%)||222.14||502.85||800.29||1100.03||1400.00||2900.00|
All in all, a logbook loans calculator is an excellent tool to use before you take on logbook loans online or on the high street in order to figure out if you can afford them or not. Always inform yourself of every aspect concerning your legal contracts and loans, especially with one as expensive and as risky as this one. For more information about logbook loans, please check out the Money Advice Service.