Ethical lending

Logbook loans are quickly becoming a popular way to secure money in a hurry using the current value of your vehicle as security. This popularity, however, means that many unscrupulous lenders are now providing logbook and other loans to the general public.

When you need to borrow money, it is imperative that the lender is not necessarily the one that will quickly give you the money, but the one that is the most ethical. This will help you in the long run should your financial situation deteriorate.

Unfortunately, many laws pertaining to logbook loans still need updating and unethical lenders take advantage of this. So when an institution offers you a logbook loan that seems too good to be true, it probably is.

We pride ourselves on the fact that we do operate ethically. We do this by checking a number of factors before offering a loan and any other ethical lender should be doing the same. If you approach someone for a loan and they are not doing these simple steps, the alarm bells should start ringing!

Check an applicant’s affordability rating

One of the vital aspects of any loan is an affordability check. It is essential to check that the person asking for the loan will be able to pay it back. Yes, there is the security of the vehicle in a logbook loan, but no loans should be afforded to an applicant that will obviously have problems paying it back. These checks take into account whether you are employed and your earnings but do not necessarily included credit checks, although bank statements and monthly or weekly wage slips are necessary.

Provide an applicant with all the necessary information

If you apply for a loan and the company does not give you all the information you ask for or expect, find another financial institution. Information that should be presented to you include:

  • The monthly repayment
  • The interest rate applied to your loan
  • Whether the monthly repayment is a fixed rate or not
  • Information about the action taken on non-payment of instalments

Ethical lenders should follow a code of conduct

Many fly-by-night lenders to do not follow a code of conduct at all. Make sure the lending institution you choose either have a voluntary code of conduct of their own (be sure to ask for a copy to hold them to it) or are a member of an organization such as the Consumer Credit Trade Association.

Organizations such as the Consumer Credit Trade Association help to protect you, the lender through a number of credit agreements which relate to lending amongst others.