If you’re a vehicle owner and you need quick cash, there’s a popular personal loan you can avail. Logbook loans, as the name implies, are loans secured on your vehicle. So long as you own a vehicle free of any financing plan, you can turn it into cash in as fast as within a day. But before you jump ahead and sign up for a loan deal, there are things to consider and key factors to keep in mind.
How much can you borrow?
With logbook loans, the loan offers are larger because of the security requirement. The maximum amount you can borrow will depend on your vehicle’s trade value. In most cases, you can borrow up to 70% of said value provided that the amount falls within the £500 to £50,000 range. Logbook loans therefore are ideal for a wide array of personal and financial needs from a minor expense to a major emergency.
How long do the repayment terms last?
Repayment terms for logbook loans start from 12 months up to 36 months or sometimes longer depending on the amount you wish to borrow. The larger loan amount you apply for, the more flexible repayment terms can be. The loan can be repaid either bi-weekly or monthly.
Who can apply for the loan?
Anyone who is a vehicle owner can avail a logbook loan deal. Even if you have a poor credit score, you’re still welcome to apply provided of course that you are of legal age and you’re a UK resident. There’s no credit check involved with logbook loans hence the high approval rate and faster processing.
What do you need to apply for a logbook loan?
For even faster processing, borrowers are required to produce a number of documents prior to making an application. Some of the required documents include the V5 document, Ministry Of Transport certificate as well as insurance details of your car. Also required for all applicants are basic requirements such as identification document, billing address and of course, proof of income. Make sure you have your recent pay slips handy to prove that you are financially capable to repay the loan.
The cost of a logbook loan
Logbook loans may be widely accessible in the UK but it’s also been receiving flak from financial experts because it’s a high-risk type of personal loan. Just take for instance the loan’s cost. Logbook loans come with steep interest rates. In fact, it’s imperative to note that the representative APR for the financial product is 400% on average. That’s a high cost to pay for a personal loan that’s secured on your vehicle.
Compared with traditional personal loans, logbook loans are definitely more expensive. But in exchange for the high cost is the promise of quick cash, which many borrowers consider the ultimate selling point especially for those with bad credit scores.
Should you apply for one?
If you can’t decide whether to take out a logbook loan or not, weighing the pros and cons of the financial product should help. If you have a poor credit score and it’s been preventing you from taking out a personal loan then a logbook loan makes a convenient alternative. Just remember that there are risks involved. The most important risk to take into consideration is the risk of vehicle repossession. Because your loan is secured against your car, you must accept the reality that you may lose your car in the process. But that doesn’t have to happen if you follow the simple rule of thumb to borrow only what you can afford.