If you need money fast and do not have the best credit getting a logbook loan might just be the ticket. But while there are many benefits to getting your money fast and without too many questions there are also reasons to avoid logbook loans. The good part of these loans is that you seldom require a good credit rating, although some banks that make these loans still do credit checks, most do not and none of the other lenders do. If your car is less than ten years old, you are at least 18 years old and you have a verifiable job and bank account you will qualify for the loan.

But what are the reasons to stay away from this credit product? The first and most important reason to avoid them is that any default on your part, even a single late payment, can lose the vehicle permanently. This means that any setback, such as a medical emergency or car repair, can easily lose the only reasonable way you have to get to work. When you sign the contract for the loan you are essentially signing away full ownership of the vehicle for the duration of the loan. When the contract has been completed and the loan paid off the full ownership reverts back to you. For the duration of the loan you will be able to use the car but it will be under the same conditions and when you buy new car.

The other reason is the interest rates on these loans. When you borrow from a bank the interest rates are usually set to match the Annual Percentage rate. Different lenders however can charge as much as 10% over the APR and this will add a great deal to the cost of the loan. This alone is a great reason by itself to avoid logbook loans.