A couple of years ago, there have been news about the banning of logbook loans by the government that stirred controversies.
Logbook loans have been the only solution to people with bad credit that need money fast. Since the loan is secured by the borrower’s car, credit companies lend money to people without having to check their credit history. So for those that have had issues financially, logbook loans are very helpful.
The government has received numerous complaints about logbook loan transaction that have gone amiss. There are a good number of logbook loan borrowers that fall off the track for their monthly payments and eventually losing their cars. This is mainly because logbook loans have very high interest rates and if you are someone who already has money problems, high interest is something you really have to avoid. Because of this, the government proposed to ban logbook loans.
Complaints About Logbook Loans
The Office of Fair Trading has received countless complaints about logbook loans and debt collectors. The Citizens Advice has also seen a 100% increase in consultations about logbook loan problems. The complaints about logbook loans range from high interest rates to debt collection harassments.
High interest rates are attached to the loans upfront. Before taking out the loan, the credit company makes a computation on how much you have to pay every month and for how long so you immediately realize how big the interest is on your loan. Since there seems to be no other solution, many people still take the bait only to later fall into a deeper trap of being unable to pay and losing their car. When this happens, complaints start.
You begin to realize that you shouldn’t have taken the loan out in the first place. Then, debt collectors come after you. They call you all the time, send you countless letters, visit you and sometimes even go to your workplace. Some collectors even make threats and then everything else comes spiraling down the drain for you. You now start to wonder, should the government ban logbook loans? That loan was the only solution for you that’s why you had to take it but now it’s giving you more problems and you don’t know what to do with it anymore. Is it fair to complain?
At present time, logbook loans are not yet banned. There have been too many differences in points of views about this type of secured loan that the government has not banned it completely. However, some measures have been put in place to prevent more problems. Logbook loan companies now have to be accredited. There is also a ceiling for interest rates. Whether it is acceptable or not, logbook loans help many people. Whether it is unacceptable or is, logbook loans also give more problems to many people. So whether it should be banned or not, there has to be a lot of discussion and another solution to be put in place that can help those with bad credit in times they need a loan for emergencies.