Nowadays, there are many types of quick loans that you can avail during cash emergencies. If you do not have the time to undergo credit checks, or simply do not want to risk getting rejected during desperate times, one of the solutions is a logbook loan.
What is a logbook loan?
A logbook loan is a type of loan that is secured against your vehicle. It was called as such because the borrower keeps your vehicle’s V5 document or “logbook” as collateral until you have paid your loan back. The logbook or V5 document is used to track the registered keeper of the vehicle.
What are the requirements?
In order to be eligible for a logbook loan, first you have to:
- Be at least 18 years of age
- Be a resident of the UK
- Be the legal owner of a vehicle which is valued at £500 or more and without any outstanding finance on it.
- Be able to show proof of income (pay stubs, bank statement)
- Provide a billing address (latest utility bills, credit card statements, etc.)
- Provide a certificate from the Ministry of Transport
- Show proof of identity
- Surrender your vehicle’s logbook
Which vehicles are accepted?
Most types of vehicles can be used as collateral, including cars, SUVs, vans, motorcycles, trucks, etc. provided that the vehicle must not be less than £500 in value and must not be more than 10 years of age.
What happens to the vehicle?
You can continue using your vehicle even while the loan is still in effect, as long as you meet the repayment terms.
How much can you borrow?
You can borrow anywhere between £500 and £50,000, depending on what your vehicle is worth and your payment capacity.
When should the money become available?
After submitting your application, a representative will review it and call you back for details. You can set your preferred time and place of meeting so that they can check out your vehicle and finish all the paperwork. If you agree to the terms, you can receive your money within the same day.
How long should the borrowing period last?
The terms of the loan vary, depending on the loan amount and your repayment capacity. Generally, you can schedule your payments weekly, bi-monthly, or monthly.
What are the advantages of a logbook loan?
Logbook loan lenders do not conduct any credit checks, which is why this type of loan attracts people with bad credit, who would not qualify for a loan easily.
Because there’s collateral involved, you can borrow a higher amount as compared to unsecured loans.
Also, logbook loans generally have same-day approval, which means you can acquire quick cash when you need it.
What’s the catch?
The most obvious risk involving a logbook loan is the danger of losing your vehicle, should you default on your payments. This is why it is important to keep your payments up to date and to make sure you can afford the terms you choose. Furthermore, because logbook loans are mainly geared towards people with poor credit rating, the interest rates are notoriously higher compared to traditional loans.
Have you ever wondered how do logbook loans work? You can find out more info here.