Borrower’s Guide to Logbook Loans

Whether it’s your first time availing a logbook loan or not, understanding how the financial product works and knowing everything you need to know about it will help. We’ve created this quick guide to logbook loans to help borrowers with bad credit get the best deals available in the market.

What is a logbook loan?

A logbook loan is exactly what its name suggests. It is a type of personal loan secured on a car. With security involved, you can borrow more than what unsecured loan deals can offer. Depending on the type of car you own and your monthly income, you have the option to borrow £500 on the minimum and £25,000 on the maximum. Repayment terms starts from 6 months to 3 years. For additional info on logbook loans, go here.

Who can avail a logbook loan?

Anyone who lives in the UK and who owns a vehicle free of financing can avail a logbook loan. You must be fully employed with a steady stream of income to get approved. To speed up your loan processing, you’re also recommended to prepare the required documents, which include car logbook document, insurance details and MOT certificate. You will also be required to provide proof of income, proof of where you currently reside as well as bank statements.

Why choose a logbook loans?

There are a number of reasons why logbook loans are very popular in the UK. Aside from its promise of quick cash for consumers in a financial emergency, the loan does not require borrowers to have a good credit score. This makes the financial product a handy alternative for people with poor credit ratings. And since providers do not consider your credit rating when assessing your loan application, approval is often speedy. In fact, more and more lenders are now promising same day approval to lure borrowers.

How does a logbook loan work?

When you apply for a logbook loan, your lender will not keep your car, just your car’s logbook document. You can still use car the way you’ve always used it. The difference is that temporary ownership has been transferred to your loan. You were able to borrow the cash because it was secured on your car. This means that you’ll have to be more committed to your repayments. Otherwise, you’ll end up facing vehicle repossession.

What are the risks involved to keep in mind?

In the event that you can no longer repay for the loan, your lender has the right to repossess your vehicle as agreed upon on the loan terms. This is one of biggest risks you need to keep in when resorting to a logbook loan. If you signed the “bill of sale“ document, it also means that you’ve agreed to the term that allows lenders to sell your car once repossessed to cover for your loan balance.

Another risks worth noting is the high cost. Logbook loans can be very costly. It comes with steep interest rates, which is a way for providers to lower the risks on their end. This is another risk you have no choice but to accept considering that you have a bad credit score in the first place.