A logbook loan is one of the latest types of loans to enter the financial marketplace and ideal for that have a less than stellar credit rating who might find it difficult to apply for the conventional loans. Instead of using a house as security or collateral on a loan application, a potential borrower is able to put forward a registered vehicle. For the duration of the loan the lender is likely to retain the original V5 document (also known as the logbook), so in the event that the borrower is able to remain up-to-date with the weekly repayments, the lender has the option of going through the process to have the vehicle repossessed.
Prior to being able to apply for a logbook loan it is of course necessary for an applicant to pass certain criteria. It is necessary for the borrower to be the legal and registered owner of the vehicle, which needs to be in a good condition in order to retain its value. An age limit on the vehicle is often in the region of eight to 10 years of age. Applicants need to be aged at minimum 18 and a UK resident. Although, some lending companies require a borrower is at least 21 years of age.
Positives of the logbook loans
A log book loan is an ideal choice for obtaining a line of credit for those that are in a position of being declined credit elsewhere, such as the more conventional loans on the high street. A quality aspect of these lenders is that many of the high street facilities are able to make same day payments, provided that the application is completed in a timely and efficient manner. For those that are requiring a fresh injection of cash at short notice, the ability to access the money on the same day is likely to be no significant plus point when it comes to the types of loans.
Logbook loans are often found to be highly beneficial for those that are requiring a lump sum at short notice in order to cover the cost of home repairs, such as a broken down boiler or issues with the roof.
A potential borrower has a much greater chance of being able to get approved for the logbook loans rather than the choices with the high street banks, mostly due to the fact that the logbook lenders aren’t as strict and do not undertake a full credit history check. Instead of using credit histories for deciding on approving a loan application, the logbook loan companies will be more interested in obtaining proof that applicant is gainfully employed and therefore able to make the due repayments. Also, they will have the vehicle as security should any issues arise in the repayment.
A further quality aspect of the logbook loans is that they aren’t restricted to a very short time payback period, which means that the borrower has that much more flexibility in managing the family finances. A loan is likely to be paid back in either weekly or monthly repayments, so when you are looking at the availability of this loans, you do need to get a complete understanding of the agreement to ensure that you are able to easily abide by the rules issued by the loan company.
Since the loan is able to offer a longer time-frame than many of the short term loan alternatives in the market, it is generally possible to gain access to a higher amounts to borrow. Although it will relate to the value of the vehicle that is put up for collateral, an idea of the amounts that can be loaned out is in the region of £500 to £50,000.
Negatives of the logbook loans
A logbook loan offers a perfect opportunity for obtaining credit, provided of course that the loan repayment instalments aren’t missed since this has the potential to cause significant debt issues. In worst-case scenario there is the potential for the logbook lender to take the action of having the vehicle repossessed if a borrower should fall too far behind with the repayments.
Similar to any line of credit that is available for those applicants without the most desirable credit history, the APR is almost certain to be a lot higher than what can be achieved with an unsecured loan obtained from a more conventional high street lender. If you want an idea of an attractive APR rate for the logbook loans, then you might be looking at approximately 375%, which essentially means that a sizeable amount of interest will be paid over the duration of the loan term.
Although these rates might seem high compared to what is available from a bank, the terms that you’re able to get with the logbook loans are still a far-sight more attractive than what you might expect to see with the alternatives on the market, such as the short-term payday loans.