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Logbook loans are a credit product with which you put up your motor vehicle as collateral. They are usually high interest loans which must be paid back over the course of maybe one month. (Of course, terms can vary but this is fairly standard, as are the other numbers quoted in this article. Always check the actual terms and conditions before signing anything, or risk losing everything.) If one defaults on this type of an arrangement, even as early as the first time, they are likely to have their car title and ownership be taken over by the lender.

Losing one’s car with log book loans is a huge disaster. The value of the car is almost always much, much higher than the value of the loan was in the first place. The lender really doesn’t want to have to take possession of your car because then he has to go through the hassle of transferring ownership, taking it over, and selling it, etc. He would rather you pay him back in cash, but if you can’t then he wants the added value of the car to make up for the hassle of selling it. In the meantime, you have just taken a major financial (and convenience) hit. So the lesson is to just simply avoid loans for logbook except when you absolutely have to engage in them. Also, you should know as much as possible that you will definitely be able to pay it back along the terms required in whatever documents you sign.

Be aware also that the lender will often want to peruse through your car before he offers anything up. He is just checking to make sure it is in workable enough condition that he feels comfortable that he could get what he wants if he had to take ownership of the title and sell it.

Finally, I just need to reiterate the importance of reading the terms of all auto title loans before signing them. Also, you must absolutely understand what you are getting into and what is expected of you on your part in order to fulfill your side of the bargain and not default and lose the car. Don’t let anyone rush you through this process. Take all the time you need or simply walk down the road to the next guy who does loans of such sort. Be smart, take the extra time: it will do you a world of good in the end.