Logbook Loans: What You Need to Know
If it's your first time applying for a logbook loan, it's always best to understand how the financial product works before going through the application. To help you do just that, here's a quick guide to logbook loans.
What are logbook loans?
Logbook loans are secured personal loans that involve your vehicle as collateral. To avail of a logbook loan, you must be a vehicle owner which means you have a logbook document under your name. Any brand or type of car is acceptable so long as it’s less than ten years in age and is free of any financing. Click here a more in depth information on logbook loans.
How much can you borrow?
Since logbook loans require a security, loan amounts are more flexible than unsecured personal loans. In general, you can borrow anywhere from £500 to £50,000 which you can use to meet a variety of personal needs from overdue bills to medical expenses, home renovation and even major investments.
How long does repayment last?
Repayment terms are just as flexible as the loan amounts. You can pay the loan from 12 months to 36 months which you can tailor according to your budget. Repayment is usually accomplished via direct debit deduction for convenience.
What is the cost of the loan?
The average Representative APR for logbook loans is 400%. When you say APR that already includes all charges and fees in addition to the interest rate associated with the loan on an annual basis. Logbook loans, therefore, are quite expensive. It pays to think things through as thoroughly as you can before signing any dotted line.
What are the requirements?
Logbook loan lenders require only the basic requirements. One, you must be of legal age (18 years old or above), two, you must be a UK resident and finally, you must own your vehicle to be eligible for a logbook loan. You’ll also need to provide of regular income and proof of identification along with other necessary documents such as:
- Logbook document
- MOT certificate
- Insurance details
- Bank account details
- What are the risks?
Other than the high interest rate, logbook loans come with high risks. The biggest risk you’ll be taking when you opt for a logbook loan is the possibility of vehicle repossession. In the event that you can’t repay the loan, your lender may recover your car as payment for your outstanding balance.
Repossession, however, is not the immediate course of action. If you can’t keep up with your monthly repayments, your lender will contact you to make new payment arrangements. A debt collector, after which, will be assigned to hound you for repayments at home. If you are still unable to repay the loan, this is when repossession may take place.
Who are logbook loans for?
Advertised with the promise of quick cash, logbook loans are for people who need a short term financing option fast. It is especially designed for people with bad credit who can’t avail a personal loan elsewhere. As long as you own your car, you can avail the loan to meet a wide range of personal needs. Just make sure you can afford the monthly repayment to avoid the high risks and other financial consequences.