Over the years, logbook lenders and their own brand of quick and easy loans have been under considerable scrutiny. Coming under heavy fire from disgruntled former customers as well as the Financial Services Authority (FSA) in that time, logbook loans have had their fair share of bad press. So just what did logbook lenders do to get the country so riled up?
A global industry
The practice of money lending is nothing new and goes way back through the ages. From the pawnbrokers of ancient Greece and Rome, through to the founding of the Bank of England in the 1600s, right up to the multiple forms of lending and borrowing that we see today.
It's one of the few things in life that hasn't changed and the basic principle of money lending remains the same: someone borrows money from a person or a bank under an agreement to pay it back later, usually with a rate of interest on top. It was only in the 1930s with the introduction of the mortgage that money lending took on a life of its own.
Since then, there's always been one form or other of borrowing money. To begin with, it usually came in the form of a loan from a bank. But it wasn't until the 1950s that high street banks started to use widespread marketing for themselves in order to 'sell' money to the general public. First with their existing personal loan service and then credit cards.
Since those days, the world of finance and loans has grown into an international industry. Borrowing is available at every turn. Not only in high street banks and building societies, but adverts in print, on the radio and now even television. Lending is big business and over more recent years, there's been a steady increase in the so-called 'fast loans' offering easy money.
The storm before the calm
Being restricted to a bank and building society loans, many people were being turned down by the high street big guns for not fulfilling the right loan criteria. Whether that was down to their income or their credit history only the lender would know, but it was frustrating for anyone who needed to borrow money and felt blocked at every turn. These new fast loans gave people the chance to get a cash injection when they might not have been able to before.
Soon enough, companies offering payday loans, logbook loans and fast personal loans started to become a common fixture. Offering fast money at the drop of a hat, it was all too easy to get what you needed. With their services being offered to everyone from almost any walk of life or financial background, the public was lapping it up.
However, the honeymoon period wasn't to last. Amid complaints and bad press, it was deemed that many of these loan companies were playing fast and loose with their customers and their money. Accusations of hidden charges, high fees and even higher interest rates as well as underhand tactics, were all thrown into the hat, with many loan companies taking the blame for pushing people into spiralling debt.
Eventually, the fast loan industry came under the investigation of the Financial Conduct Authority (FCA) and the results weren't good.
The findings of the investigations managed to uncover that it was commonplace for some logbook loan companies to withhold important information from customers. This included details of the loan itself, not informing them of cooling off periods, covering up interest rates or the circumstances customers could find themselves in if loans weren't repaid.
What the FCA found, confirmed what the bad press was saying and its findings were under no uncertain terms that many firms were showing "poor behaviour" and needed to "drastically raise their standards". In April 2014, the FCA took over as regulators of consumer credit companies and took ongoing action to improve standards across the industry, insisting that companies needed to put their customers first.
In the last three or four years, the presence of the FCA has markedly improved the reputation for logbook loan companies. Now, this particular avenue of borrowing is one of the most popular and many companies pride themselves on the transparency of their logbook loans. So with all the improvements made over the last few years, what do borrowers need to look out for and what are the top five things that make logbook lenders good?
What to look for in good logbook lenders
Logbook loans are personal things. What might be right for you may not be a good fit for someone else? It can come down to things like an interest rate, a fee or any other aspect of the loan. It can even come down to the attitude of the advisor on the other end of the phone. So it's always advisable to do your homework, find out what's out there and never just accept the first loan you find.
1. Lower interest rates
Loan interest rates can make or break your ability to pay back your loan in full. There's an understanding that interest rates for 'fast loans' are higher because of the level of risk undertaken by the loan company. But it's certainly one of the first things you should look out for. There are logbook loan companies that can charge almost double the rate of interest than other logbook lenders, so finding a lower one can save you money right from the start.
2. No hidden fees
Though hidden information, including fees and charges, were among the FCA's list of priorities to cut back on, it's still an issue of customer awareness. Many lenders like to bury their information in their terms and conditions. Though they're making the information available, it's just not that easy to find. Responsible lenders will tell you upfront about any fees or charges that you could incur during your loan, whatever they may be. If they don't tell you straight away, ask them and they'll let you know. If they try and gloss over it and say that everything's in the T&Cs, avoid them.
3. Credit checks
Credit checks are one of the first things lenders will undertake on any standard loan. They'll check your credit history and your current financial situation and if you don't make the grade, your application could be denied. What's more, a credit check will appear on your record for many years to come, so multiple applications could be a red flag for lenders in the future. Always choose a lender don't undertake credit checks at all. That way your credit history, and your application, remains private.
4. Flexible repayments
Having a flexible repayment option can be a lifesaver when it comes to organising your own finances. Many lenders offer monthly repayment schedules, but often our own income doesn't come in monthly instalments. It could be weekly or even daily. Look for a lender who gives a choice of repayment terms including monthly, fortnightly or weekly. Never accept a repayment term that will put you in financial difficulty.
5. Pay as you go interest
As we've already established, high interest can be a deal breaker for any loan. But many logbook lenders will continue to charge the same amount of interest for the course of your loan, regardless of how much you pay off. Lenders who have a pay as you go system will reduce your interest levels if you're able to make any overpayments and pay more off your loan. This will save you money in the long term and make your loan far more manageable.
Though this all sounds like an unattainable wish list, there is one logbook lender that includes all these tips into their loans as standard.
Car Cash Point has one of the lowest rates of interest - almost half that of other lenders; we don't have any hidden fees or charges - we always advise you on any potential charges you could incur; we don't require any credit checks - if you've had credit problem in the past, we should be able to help you; we have a choice of repayment plans to suit you - weekly, fortnightly, four-weekly or monthly; and we're the only logbook loan lender to offer pay as you go interest.
On top of all that, we have award-winning customer service to help you through the application process and to answer any questions at any time.
When you need a loan from an award-winning logbook lender, call 0333 220 4419 today to speak to one of our trusted advisors, or submit our quick application form at the top of the page. You can start your application straightaway and your loan of between £500 - £100,000 could be with you in under an hour!