Things To Know Before Taking Logbook Loans Online

In the UK, thousands of individuals struggle to get approval for a traditional loan due to their bad credit history or low income. So you may look for alternatives to traditional loans to meet your financial needs. Secured loans are good alternatives to conventional loans, and you have to use your valuable assets as collateral. Logbook loans online are secured loans that are becoming popular.

They allow you to take out a loan by using your vehicle as a security against the loan. It could be a solution to your problems; if you do not have knowledge about this type of loan, read on to learn how it works and how you can get it.

Point Covers:
Logbook Loan Explained
How Do Logbook Loans Work?
Who Can Get A Logbook Loan?
How Can You Apply For A Logbook Loan?
How Much Does A Logbook Loan Cost?
Benefits Of Logbook Loans
Drawbacks Of Logbook Loan
Alternatives To Logbook Loan

Logbook Loan Explained:

Logbook loans are means of borrowing money by using your vehicle as security. This vehicle is usually a car, and the logbook lender legally owns your vehicle until you repay all the amount. However, you are still able to use your car as long as you are making repayments on time, but if you default on the loan, the lender has the right to sell your car and get the loan amount.

A logbook loan is a simple and easy way to withdraw money from a vehicle without going through a hard credit check. The amount you borrow depends on the value of your car. Many direct lenders and brokers are providing logbook loans online. But before applying for a loan, you may have many questions about a logbook loan, such as how it works, its cost, the application process and repayment terms. So let’s find the answer to all these questions.

How Do Logbook Loans Work?

Logbook loans are available online and at the high street lenders. Typically, you can borrow an amount from £500 to £5000, depending on the market value of your vehicle. It is convenient to get finance if you have a vehicle and find it difficult to get credit from elsewhere due to bad credit history. With a logbook loan, you have to sign a credit agreement, and bill of sale, and the lender provides you with copies of these agreements.

A bill of sale is a certificate to transfer the vehicle’s ownership to the lender. The lending criteria vary from lender to lender. However, the lender asks you to show the vehicle’s registration document, which will prove that you are the car’s owner. When you take a logbook loan, a staff member of the lender visits your place to carry out a physical infection of your vehicle. Then the lender will complete the documentation and collect the vehicle’s logbook or registration documents. In addition, the lender requires a third party to witness your loan documents.

Who Can Get A Logbook Loan?

If you want to take out a loan against your vehicle, you must be of 18 years or over in age and legally own a vehicle. In addition, your name should be present on the logbook or registration documents. If you meet this eligibility criterion, you can apply for a logbook loan online or through a high street lender. As these are secured loans, most of the lenders do not require the borrower to have a high credit score. Even if you have bad credit, you can get a loan against your vehicle, but you may have to pay a high-interest rate. Therefore, before applying for a loan, you should make sure that you can afford to repay the loan.

How Can You Apply For A Logbook Loan?

With the development of new technologies in this digital era, everything has become easier. Now you do not need to go to the loan providers. You can find many online logbook loan providers.

“The application process is quite simple and easy. Every lender has a loan application on its website, and you have to fill out this application. You can get an instant quote after providing the necessary information.”

This information includes your personal information, your regular expenses and your income. The loan providers usually conduct a credit check to find out your affordability. With the affordability check, your loan application process is completed online.

Once the loan is approved, your money is transferred to your bank account within hours. Many logbook loan providers in the UK offer different loan terms and rates, so you must shop around to find the best logbook loan deals. This way, you can get a loan at an affordable rate and your required terms.

How Much Does A Logbook Loan Cost?

As we described earlier, logbook loans are designed for people having a poor credit history. Having a bad credit score means you are a high-risk borrower. It means that logbook loans can be extraordinarily expensive. The interest rate on logbook loans ranges from 100% to 500% annual percentage rate.

With a loan term that varies typically from three months to five months, such loans get very expensive. Many comparison sites are available that allow you to compare logbook lenders and help you save time and energy. You can also get instant quotes and decide whether you can afford to repay the loan or not.

Benefits Of Logbook Loans

In recent years, logbook loans have become very popular among individuals in the UK. More and more borrowers are turning to this funding source to fix their cash flow problems. There are numerous reasons why this type of loan can be the best solution for those looking for quick access to funds.

“ Let’s have a look at logbook loan benefits to know why it is becoming so popular:”

Easy to Apply

The application process for logbook debt is usually quick and straightforward. You can apply online and need to provide all the necessary information along with the required documents. Typically, a loan application is approved within a few hours. As the competition is increasing with the increase in the number of lenders, every lender is trying to offer easy and hassle-free services to attract more customers.

Simple Criteria

Most logbook lenders offer simple and easy to meet eligibility criteria so that more and more people can apply for finance. You only have to be 18 years old or over and must legally own a vehicle. Only if you have these two things can you apply for a logbook loan and most probably get approval.

Bad credit considered

One most significant logbook loan benefit is that individuals with bad credit can also apply for it. Many lenders even do not carry out a credit check for loan approval. Individuals with a below-average credit score or poor financial history succeed in getting this type of loan. As long as you legally own a vehicle and can use it as a security against the loan, lenders are most likely to approve your loan application.

Flexible Terms

Logbook lenders offer terms that are suitable for borrowers, and these terms can also be tailored according to borrowers’ needs. In contrast, traditional lenders do not offer this flexibility. Some lenders offer loan terms of only three months, while others offer up to 36 months loan terms. These flexible terms make logbook loans an excellent alternative to traditional loans and suitable for a wide range of financial needs.

Quick Access to Funds

If you meet all the eligibility criteria and have the required documents, your loan application approval chances are increased. As compared to standard bank loans, logbook debts take less time in approval and provide quick access to funds. In addition, some lenders have the ability to approve applications on the same day, while others transfer funds within hours.

Flexible Amounts

The amount that you can take out depends on the value of the vehicle you are using as security against the loan. It means there is huge flexibility in the loan amount and most lenders allow you to borrow an amount between £500 to £50,000, depending on the value of your vehicle. Sometimes you are able to get a huge amount of money through this type of debt compared to bad credit unsecured loans. On the other hand, if you want to take out only a small amount, a logbook loan can also fulfil this requirement as well.

Drawbacks Of Logbook Loan

Although logbook finance offers numerous benefits, it also has some drawbacks that you should keep in mind before taking out a loan.

High-Interest Rates

The most significant drawback of a logbook loan is the high-interest rate. In addition, it is an expensive way of borrowing as compared to other personal loan alternatives. With an annual percentage rate of up to 400%, finance experts find it a costly option, so you should consider it as a last resort.

Impact on Credit Score

Most lenders do not require a good credit score to grant a logbook loan, but it does not mean that taking out such a loan will not impact your credit score. If you do not make repayments on time or default on your loan, it will greatly impact your credit score. However, when you make timely repayments, your credit score improves.

Repossession

As logbook debt is a type of secured debt and you have to use our vehicle as security, there is always a risk of repossession. If you are not able to repay the loan amount and default on the loan, the lender has the right to sell your vehicle and get the loan amount back.

Loan Trap

It is easy to get trapped in a debt cycle with high-interest funding options like logbook loans. If you already have a bad credit score, you will be trapped easily when you borrow more money to fulfil your financial needs. It is because you have an additional repayment that can create more issues for you. Therefore, you should only borrow what you really need and afford to repay.

Finance Free

If you have already taken a loan against your car, you can not use it as a security to take out a logbook loan. This is because the vehicle you are using as collateral has to be finance free to meet the eligibility criteria of logbook debt.

Alternatives To Logbook Loan

It may seem that a logbook is a perfect solution if you are in need of quick finance and have a bad credit score, but you should consider its alternatives too before making a final decision.

Bank Overdraft

Overdraft is the feature of a bank account that you can use to borrow a specific amount of money from your bank. This type of loan can be a perfect option to cover emergency expenses or borrow a small amount for a short period. It can also act as a buffer if you spend extra money in a month. The interest rate and other charges of bank overdraft depend on your bank and personal circumstances. Some banks also offer this facility for individuals with poor credit scores, but you should always best discuss options with your bank.

Guarantor Loans

It is an option for individuals who have no credit history or poor credit history. This type of debt requires a friend or family member with a good credit score as a guarantor on the loan amount. Your guarantor must be of age 18 or over, in full-time employment and should not share a bank account with you. It is essential to remember that your guarantor has to complete the payment if you fail to repay the loan. The interest rate of guarantor loans is higher than the other loans, but it is still cheaper than the logbook loan.

Credit Union

If your income is not enough to fulfil your expenses and you need a small amount to meet your needs, it is worth considering a credit union loan. These are small unions where members use tier savings to help each other and run the union. However, if you take out this loan, you must be a credit union member. The interest rate of credit union loans is low and can not legally exceed more than 3%.

0% Money Transfer Credit Cards

If you need quick access to funds and do not want to pay a high-interest rate, a money transfer credit card can be suitable. Many credit card providers offer an interest-free period on money transfers. They send money to your bank account, and you can use it for almost any required purpose. Mostly you can use a 0% interest rate credit card for up to 3 years maximum. However, it may not be a good option for you if you have a bad credit score as it can be difficult for you to repay the loan amount, and also, you may have to struggle to get approval for a credit card.

Conclusion:

If you struggle to get a loan from banks or traditional lenders due to your credit score and legally owning a vehicle, a logbook loan can be a perfect option. You can use your vehicle as collateral to borrow money and also continue to use your vehicle during a loan as long as you are making timely repayments.

You can apply for logbook loans online without any hassle and get quick access to funds compared to traditional funds. However, you should look at the drawbacks like high-interest rates and risk of repossession before making a final decision. We suggest you make a price comparison to find the best logbook loans and only take out a loan if you can afford to repay them.