It is now compulsory to have representative examples on a website that tells potential customers how much it will cost to take out a loan. This is all good but lets be honest, most people will not even read that. When someone needs money fast and they find a company that will lend to them, they go straight to that company and take out the loan.
Buy now think later
There are a large number of people who will not worry that there is the possibility of their car being repossessed and they could be left without a vehicle, they will cross that bridge when they come to it. The same goes for the interest rate, to these people it doesn't matter that the interest rate in 500 percent, at least they can get a loan. Again, they will worry about it when they are paying off the loan and are having problems making the payments.
When are loans against your car useful?
Logbook loans are useful when you need a bit of quick cash and know you can pay it back quickly. Lenders will carry out affordability checks on you, but only you as the borrower know how stable your job is or if you will be able to pay the loan back in a few months time. Everyone who chooses to use a logbook loan needs to carefully think through the consequences of not being able to pay it back. It could set you back financially for years if you go into serious debt.
Lenders should be open and honest with you about the loan. If they think you can't afford it, they won't give you the loan. In fact if they are allowed to trade under new rules, they will be bound by agreement not to lend to you. Sometimes people will slip through the net and manage to take out loans that they cannot pay off.
If you are in a situation like this, firstly speak to the lender, they may offer you a payment plan and allow you longer to pay back the loan. The next step would be to consult the Money Advice Service for help, and then possibly go to Citizens Advice or a debt charity. There is plenty of help out there from experts who will be able to guide you in the right direction.
The video below shows how people have used debt advice from Citizens Advice to get out of tricky financial situations.