Understanding Logbook Loans

If you have bad credit and you’re badly in need of extra cash, you know that your options for a personal loan are limited. Mostly your loan application will be rejected because major borrowers rarely want to deal with high risk customers. If you’re a vehicle owner, you’ve caught a lucky break. Even with bad credit, you can release some cash from your vehicle through a logbook loan.

What is a logbook loan?

A logbook loan, as you can probably glean from its name, is a type of personal loan that will require your car for collateral. Your lender won’t keep your vehicle, which is a good thing. You can keep driving your vehicle while releasing cash from its value at the same time. The only thing your lender will keep is your vehicle’s logbook document. And as soon as you sign the contract, this means that you’ve transferred temporary ownership to your lender. Essentially, you’re still driving your car but your lender owns the vehicle until the loan is fully paid off.

Who can apply for a logbook loan?

Only the most basic of requirements are required by logbook loan lenders. For one, you must be of legal age, that is 18 years old or above. Two, you must be a UK resident ideally for at least 3 years. And three, you must own a vehicle free of financing and registered under your name, on which the loan will be secured against. For faster loan approval, borrowers are recommended to prepare the following documents prior to your loan application:

How much can you borrow?

Since logbook loans have your vehicle for collateral, you have more flexible loan offers at your disposal. Most logbook loan providers offer loans between £500 and £25,000. No matter if you need a small amount to tide up the month or a large sum of money for a major expense, you’ll always have logbook loans to resort to when there are no other options. Logbook loans also offer flexible repayment terms. You can choose to pay the loan weekly or monthly. Repayment periods run from 12 months up to 36 months depending on your income and loan amount.

How much does a logbook loan cost?

Though logbook loans offer the promise of quick cash, there’s a downside that comes with that promise. Logbook loans can be pretty costly. In fact, this type of personal loan is advertised with a representative APR of 400% on average. This is already inclusive of interest rates, admin fees and other associated loan charges. When compared with other types of personal loans, this is pretty expensive, which is why borrowers are advised to think thoroughly and consider all other options before resorting to logbook loans. To know more how APR affects your loan’s cost, go to Money Saving Expert.

Should you avail a logbook loan?

If you’re facing a financial emergency that needs immediate financing, getting a personal loan is often a viable option. But getting approved for a loan is often difficult if you have bad credit. In this case, this is where getting a logbook loan makes financial sense. Though the financial product may come with hefty interest rates, logbook loans are easy to avail and has minimal requirements. You just need to remember that there’s a price to pay for incurring bad credit for your past financial decisions. To avoid any other major financial consequences, make sure to stick with borrowing a loan you can afford to repay on time.