Alternative finance: vehicle equity release

Aside from your home, your vehicle is probably one of the most valuable possessions you own. The expense of your car, motorhome or motorbike itself ties you up. Auto equity release schemes or vehicle equity release schemes mean that people who need a quick bit of cash can take out a loan based on the value of the vehicle. This is much like a mortgage in that your vehicle is used as a form of collateral for the loan amount you choose to take out. In essence, vehicle equity release is a type of secured lending; this makes it the much safer alternative to traditional logbook loans.

What Are the Advantages of Vehicle Equity Release Loans?

There are so many benefits to equity release loans; they are certainly much better than traditional logbook loans which are very high risk.

First of all, vehicle equity release loans are incredibly flexible. In a similar way to payday loans, logbook loans are designed to cover you for short periods. This is just one of the reasons why traditional logbook loans have such high-interest rates. With vehicle equity loans, there is much more flexibility. You can opt for repayment terms that suit your income and that remain parallel to the amount you have borrowed. This means that you can choose smaller payments which fit in with your income stream.

You can be accepted for a logbook loan no matter what your credit history is. All you need to do is prove that you are the registered owner of the vehicle you are using as collateral. Usually, it is a straightforward form online, so you won’t need to worry about waiting to be approved.

Another significant benefit of vehicle equity release is that your vehicle will remain your possession. You will never need to transfer ownership of your car to the lender. Your car is still yours to use, while you have the money that would’ve been tied up in the cost of the vehicle.

More About Traditional Logbook Loans

A logbook loan essentially means that you are signing over at the ownership of your car. You can only receive your money by losing access to your logbook, which is a considerable disadvantage compared to vehicle equity release loans. Even though you will still be able to use your vehicle, you need to understand the downfalls of opting for a logbook loan; if you are unable to make your repayment, your car will be taken away from you. Many companies which offer these traditional logbook loans will dumb down this eventuality, to convince you to go with them. It is effortless for vehicle repossession to happen, simply because of the way that traditional logbook lines are designed.

The High Risks of Logbook Loans

No doubt taking out a logbook loan is high risk. Lenders in this field do not have the highest standards or best of reputations. Unlike vehicle equity release loans, logbook loans often bring about a whole host of issues and annoyances that can be avoided. If you choose another type of loan you are most certainly reducing the risks compared to taking out a traditional logbook loan.

The most apparent risk is that you risk losing ownership of your vehicle. If your repayments fall behind schedule, then your car will be repossessed and sold. Although this might seem like a risk worth taking, because you believe you can keep up with the repayments, it may not be as easy as you think. Most of these lines are set up so that you find it more challenging to pay back your monthly amount. As well as handing over your logbook, you also have to transfer ownership of the vehicle into the lender’s name.

The interest rates surrounding logbook loans are enormous. This is the main risk you are taking when you opt for a logbook loan. The rate of interest on the logbook is incredibly high when you take a step back and look at the big picture. The average interest rate on the logbook loan can reach 500%. Indeed, high risks come hand-in-hand with high-interest rates, and logbook loans are no exception to this rule.

Taking out a vehicle equity release over a traditional logbook loan is a much safer and reliable route. If you have any questions about vehicle equity release, do not hesitate to speak to a professional; they will be able to guide you through the entire process.