A number of users of this website have come to us with queries about financial products that are on offer from various credit providers throughout the United Kingdom. One such product that has become very popular throughout the UK are logbook loans?
But what are they exactly?
In this article, we will unpack logbook loans in detail to further help you decided if this is a product you can make use of.
A logbook loan is aimed at people with bad credit ratings
With the economic downturn that has hit the United Kingdom since the global economic crisis of 2008, many residents of continue to suffer financially. This has led to a large percentage of the population defaulting on their credit products, missing payments on their overdrafts, credit cards, mortgages and vehicle payments.
This affected their credit rating which slowly began to dip downwards, eventually moving into a negative status. But what does a negative or bad credit rating mean? Well, if you suffer from a bad credit rating, you cannot get conventional loan products. You will be turned down time and time again for credit cards, an overdraft, a mortgage and a vehicle loan amongst a host of other credit facilities.
But that’s where a logbook loan comes in. This loan facility does not take a person’s negative credit rating into effect at all.
How does it work?
Well, a logbook loan is something you can apply for if you own a vehicle, motorbike, caravan, truck or lorry. The vehicle acts as security with the loan provider which effectively means that once you have signed the loan contract, the loan company own the vehicle until you have paid off the loan. The good news however, is that you can still use your vehicle on a daily basis!
How does one apply?
Nothing could be simpler than applying for a logbook loan. Find an institution through which you will take the loan, have them look at your vehicle to assess its general condition and the condition of its engine and based on this, your income and expenditure, they will offer you a loan amount against your vehicle.
There are a few things to note here, however.
- You will never be offered more than 50% of the value of your vehicle.
- Your vehicle must not be more than 10 years old. Certain companies will consider valuable older classic cars or even sports cars older than 10 years, however.
- Your vehicle must be fully paid up.
- You must be the owner of the vehicle. It cannot belong to a parent, sibling or a spouse. If it does, they must apply for the loan.
- The loan company will take possession of your vehicle logbook (V5 document) for the duration of the loan.
- You must have full and comprehensive insurance on the vehicle. This protects the loan company’s investment when it comes to theft, accidents or even damage from extreme weather.
When applying, you will need to provide a number of important documents. Take them with you on your first visit to the loan company and you can have a loan approved in as little as 24 hours. The documents you will need include your identity document (a passport or driver’s licence will suffice), wage slips for the past three months, bank statements for the past three months (six months if you are self-employed), a utility bill to prove where you stay, the logbook of your vehicle and proof of comprehensive insurance.
Are logbook loans worth it?
As someone who might have a bad credit rating, you will never be able to secure a normal loan product from a commercial bank. And yes, there are times when you need to take out a loan. In this regard, your best option is in fact, a logbook loan. Although they do have higher annual percentage rates than a regular loan, they can secure you anything from 250 to 50 000 pounds depending on the condition of your car, your income, and your expenses.
Please note however, it is imperative to keep up your payments each month. Never miss a payment as this will put your car in jeopardy. The loan company has every right to repossess your car and sell it to recoup their costs should you continually miss payments. If you are going to miss a payment, let the loan company know and together with them, you can work something out.
For more information on logbook loans visit http://www.simplelogbookloan.co.uk.