Understanding Logbook Loans
When you have bad credit and you’re looking for alternative to traditional personal loans, logbook loans are easy to avail and make a handy alternative to meet all your quick cash needs.
Advertised with the promise of quick approval even with bad credit, it’s no surprise why borrowers across UK continue to apply for said loan. There are, however, key considerations to keep in mind before you sign any deal. Here is your quick guide to understanding the financial product better:
What are logbook loans?
Logbook loans are personal loans that require a security, in this case your vehicle, to be eligible for. Logbook loans, in other words, are secured loans that offer larger loan amounts from £500 to £50,000. You can repay the loan weekly or monthly between 12 months up to 36 months depending on your arrangement with your lender.
With logbook loans, you still get to keep your car while your lender keeps the V5 or logbook document. You’ll also need to sign a bill of sale agreement along with the credit agreement essentially transferring temporary ownership to your lender. To know more about logbook loans, Money Advice Service has more info for you.
Who is it for?
Logbook loans are for struggling borrowers who can’t avail a traditional personal loan because of bad credit. If you have a history of ccjs or defaults and you’ve been refused a loan time and again, logbook loans are handy alternatives to your quick cash needs. Logbook loans are available online and on the high street. You can easily avail the loan provided that you meet the requirements since there are no credit checks involved in the processing.
What are the requirements?
The requirements to availing a logbook loan are pretty basic and straightforward. First, you must of legal age, at least 18 year old. Second, you must be a UK resident. Finally, you must be a vehicle owner. Lenders will need you to provided the needed documents which include your vehicle’s MOT certificate, insurance details and of course, logbook document. In addition, you’ll also need to provide proof of identification, proof of income and billing address.
How much do logbook loans cost?
Because logbook loans are specifically offered for people with bad credit, lenders are taking higher risks when they lend money to borrowers. To offset said risks, lenders offer logbook loans at high interest rates. On average, the representative APR for the financial product is set at 400%. This already includes the cost of the interest and other associated charges to the loan on an annual basis.
What are the risks?
With your vehicle as security, there’s always the possibility of repossession to worry about. Lenders have the right to repossess your car in the event of nonpayment as dictated by the bill of sale document and credit agreement. Repossession, however, is usually the last resort. Lenders especially the reputable ones will give you ample time to settle your accounts before they opt for repossession. After several attempts and you are still unable to repay the loan, the lender may sell your car to cover for your outstanding balance.
Should you apply?
Because logbook loans can be quite expensive, financial experts often advise borrowers to steer clear from the loan. It’s a different story, however, if you have bad credit and you need cash fast. If you do decide to apply for a logbook loan, it’s important to keep in mind that logbook loans are high risks. You may lose your car in the process so it’s best to keep your borrowing within reason.