There are many different reasons why we take loans, however, all of them revolve around not having sufficient money. There are two kinds of loans available to us when we are cash strapped- secured loans and unsecured loans. Secured loans are those which require collateral while unsecured do not. An example of a secured loan is a logbook or v5 loan. An unsecured loan is commonly called a personal loan. Both these loans have pros and cons. However, below we give you reasons why you should consider getting a secured loan over an unsecured loan
Unsecured loans seem catchy at first glance. The sound of no collateral is sweet to the ears. However, appearances can be deceiving. When something sounds too good, think twice. Behind this captivating appearance, they hide high-interest rates. With secured loans such as v5 loans, however, you will not be subjected to exorbitant interest rates. You will not feel as if the lender is trying to impoverish you and the rates will not cost you an arm and leg. Secured loans interest rates are very affordable.
You are required to repay a personal loan almost immediately it’s offered to you. The repayment period of a personal loan is very short. This means that you will feel the pinch of parting with lump sums of money every month or week to service the loan. With secured loans, on the other hand, loan repayment is spread over a long period of time. The money going into servicing the loan will feel less impactful to your pocket. It will still give you room to make investments and other financial commitments.
Amount of money
There are very many factors that are taken into consideration when offering you a personal loan. Even then, the lender will still be reluctant to offer you the loan because you remain a gamble for them. For this reason, they will tend to offer you less money than you hoped for. However, with logbook loans, you will be granted an amount of money equivalent to the value of your car. The amount of money you qualify for is determined by the value of your car, not some other arbitrary factors
Despite personal loans being advertised as easy to get, they really aren’t. Personal loan lenders subject their applicants through a vigorous application process to determine their creditworthiness yet still consider their clients a high risk. You can imagine how much more difficult it would be to acquire a personal loan when you are labelled ‘not creditworthy’. This type of loan is therefore less suitable for people who have a poor credit rating.
Logbook loans, on the other hand are a walk in the park, very simple to get. All you require to receive this loan is a roadworthy vehicle. There is no in-depth analysis of your credit history or any subsequent aptitude tests. The lender just needs your logbook.
It is important to know what will happen in the event that you default a payment. With unsecured loans, the lenders are stringent and that is why it is important to read the fine print. There a couple of things that could happen in the event that you default on a payment. You could incur additional costs, your credit score could take a huge blow or/and there might be a line in the contract that allows the lender to recover the cost with one of your possessions. You can never be too careful, you never know what they have under their sleeve. With logbook loans, on the other hand, the consequence of defaulting is very transparent. Failure to make payments leads to the repossession of your car.