For decades, logbook loans have earned a very bad name. From high APR to associated high risks, the list of potential dangers ahead is endless. Indeed, every financial expert will strongly advise you to stay clear of the logbook loan as much as possible.

Despite all the risks, many people are left with no option but the logbook loan when banks decline their applications. To keep these risks low, it is important to identify the right lender and ask these ten questions.

1.      What is your level of customer care service satisfaction?

A good logbook loan lender should have a high level of customer care customer satisfaction. This demonstrates that a lender is committed to helping clients plug their financial gaps successfully without getting into further trouble.

2.      What are your requirements for logbook loans?

This question is very helpful because it helps the applicant know whether he qualifies for a loan or not. This question will assist you to understand whether only those in employment are eligible or even self-employed people can apply.

3.      How flexible is the loan repayment process?

While most loans are offered with fixed repayment terms, lenders are flexible in some cases and can help clients address issues when they arise. Such a lender is very helpful because you can renegotiate the terms of repayment to avoid getting penalties.

4.      Do applicants need to give reasons for their loans?

Borrowing loans from conventional banks require a lot of documentation including a clear explanation of the necessity of the cash. For example, if you need cash for holiday, mortgage, buying a new car, or medical emergency, the bank will need a clear explanation. However, many logbook loans do not require people to give explanations of what they need to do with the cash.

5.      Will the lender contact my employer?

Many people going for logbook loans want the information to be kept as far away from their employers as possible. In many cases, the need for money is personal, and information about such borrowing could portray an employee in a bad light. If the lender will contact the employer, consider the implications and look for a different company.

6.      How secure is clients’ information from access by third parties?

When you borrow money from a lender, the personal details you provide should be protected from third parties. The lender should provide this guarantee in writing and demonstrate that no other person will have access without your consent. Whether it is your bank info or tax details, appropriate encryption technology should be in place to safeguard it from cyber criminals.

7.      Because you will be transferring the car ownership to the lender, what are your obligations?

Once you submit the V5 (log book) to the lender and sign the loan agreement, it means you have temporarily surrendered its ownership. However, this does not relief you from taking care of it. The lender will demonstrate the obligations you must meet including insurance and regular maintenance.

8.      Is your logbook loan firm licensed by the relevant authority?

All logbook loan firms in the UK are required to adhere to relevant legislations. You should particularly insist on knowing that the lender follows the Federal Conduct Authority and Consumer Credit Trade Association. By checking these authorizations, you can rest assured of identifying and staying away from fraudsters.

9.      Are there penalties for making early payments?

If you borrow today and agree to repay the loan within 24 months, the lender should not penalize you for repaying at a faster rate. Make sure that such a clause is plucked out from the agreement before signing the loan

10.  If a borrower finds it difficult to make monthly repayments, do you have a way of helping him?

A good lender should not be hasty to recover the car and sell it. Rather, he should reach the borrower to find out the problem and try to help. For example, the borrower might have had issues with his bank accounts and is in the process of resolving it. By talking to the borrower, it is possible to come up with a workable solution to make repayment consistent.