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Logbook Loans - What You Need to Know

When it comes to loans that are quick and easy to avail, logbook loans come to mind immediately. It's currently one of the most popular and hottest options for many borrowers in UK today. As long as you are a legal owner of your vehicle, you can pretty much expect fast approval for application.

But while logbook loans are convenient and fast to apply, like any type of loans, it comes with consequences too especially if you fail to make repayment. So before getting one, below are things you should know about the financial product to make an informed decision.

What is a logbook loan?

A logbook loan is a type of secured loan where your vehicle serves as security or collateral. In essence, the car is temporarily owned by your lender. They get to keep your logbook or V5 document while you get to keep and still use your car. Once the loan is fully repaid, you can get you V5 document again.

To know more about the financial product, you can go to Money Advice Service for a detailed guide.

Who can avail of the loan?

One of the premises why logbook loans are very popular in UK today is attributed to the fact that's its available for anyone who owns a vehicle. Having a car that's free of financing is the single most important consideration when getting the loan. Lenders are not really strict when it comes to credit history which means those with bad credit are welcome to apply.

Whether you're fully employed or self-employed, you are welcome to apply too as long as you own vehicle and you can provide proof of income.

What are the requirements?

The requirements are pretty basic to be eligible for a logbook loan. First of all, you need to be of legal age (18 years old or above) and a resident of UK. Next, you have to be a legal owner of the vehicle where the loan is going to be secured against. The car should be less than 10 years and free of financing. Some lenders may also specify the brand that they only accept. Finally, you have to provide the following documents:

  • Logbook or V5 document
  • Insurance details
  • MOT certificate
  • Proof of identification
  • Proof of employment

How much and how long?

In general, lenders offer logbook loans ranging from 500 up to 25,000. Others even offer up to 50,000. As for the repayment duration, it can be a month, 3 months or up to 3 years.

The maximum amount that you can borrow will depend on your vehicle, usually up to 50% of the asset's official trade value. Your income also plays a part during the assessment as it will determine your capacity to make repayments.

What happens if repayment is not made?

Because logbook loans are secured, the greatest risk that every borrower is taking is the possibility of car repossession. This happens if you frequently delay with repayments or misses several months of repaying the loan. When it does happen, the lender will normally get in touch with you first or send a debt collector to collect you repayment. If they do not get any response then they might file a complaint and as a last resort, enforce repossession as indicated on the terms of agreement.