Logbook loans are personal loans widely available in the UK. So long as you’re a vehicle owner, you can apply for the loan even if you have a poor credit history. But before you get too excited and apply for the first logbook loan deal you stumble upon, it’s worth remembering that like other financial products, logbook loans come with risks. Understanding how it works should help you decide whether it’s the right loan for you or not.
What is a logbook loan?
This is a type of secured loan that has become highly popular in the United Kingdom in recent years. The loan allows borrowers to borrow money from £500 up to £50,000 by securing said loan on their vehicle. The vehicle, in short, is the security or collateral that lowers the risks on the lender’s end. This eliminates the need for a credit check requirement, which means that even those with bad credit can avail the personal loan. Logbook loan offers are also larger than what unsecured personal loan types can offer because of the security involvement. If you want to learn more about logbook loans, Money Advice Service has more to say about the product.
If you’ve been applying for a personal loan but can’t get approved for one because of your poor credit history then a logbook loan is for you. If you own a car and in need of quick cash for a financial emergency, applying for logbook loans makes perfect sense.
Logbook loan, at its simplest, is specific for people with bad credit who are having a hard time availing a personal loan from major banks and other high street lenders. Just make sure you’re of legal age, you live in the United Kingdom and you own a vehicle before applying for a logbook loan.
When you apply for a logbook loan, the lender will require you to provide a set of documents, which will include your insurance details, vehicle’s V5 document, as well as MOT certificate. Additionally, you need to provide an identification document, proof of address as well as proof of income.
If deemed eligible for logbook loan application, you’ll be essentially handing over temporary ownership of your vehicle to your lender. You’ll be signing a debt agreement and “bill of sale” document if you decide to move forward with the loan application. This will then imply that you agree with the loan terms. In the event that you miss payments and fail to respond to your lender’s reprimands, you may end up losing your car. As per the credit agreement, you allow your lender to repossess your vehicle to cover for your outstanding balance.
Because logbook loans are secured loans, you’re basically putting your vehicle at risk. While this set-up allows you to borrow a huge sum of money, opting for this financial move should be considered carefully. In fact, most financial experts will probably tell you to consider the loan only as a last resort. Instead of applying for a logbook loan at the first sign of a financial trouble or emergency, you’d be better off checking out other cheaper loan or financing alternatives.
Only after you’ve checked out loan options should you apply for a logbook loan. If approved for a logbook loan, it’s very important to keep in mind that there are high risks involved. If you don’t want to lose your car to repossession, you should commit to pay your monthly dues on time every month until the end of logbook loan term.