A
logbook loan provides vehicle owners a fast and easy access to a cash loan with
the need for a credit check often replaced by an “affordability check”. This
means that vehicle owners with a bad credit history, CCJs, those who don’t have
a bank account and those who have had a loan application declined already may
still have access to the credit they’re looking for.
Basically,
the way a logbook loan works is as follows
The
applicant is required to:
1: Fulfil
personal criteria – often as simple as being over 18 and residing in England or
Wales.
2: Be
the legal owner of a car (or other vehicle) that is clear (or nearly clear) of
finance and under a certain age (often 10 years).
3: Fill
in a basic application form.
After
the application has been submitted the applicant will normally be required to
produce (usually at a local centre) the following:
1: The
car or vehicle along with logbook, MOT certificate and insurance.
2: Evidence
of income and expenditure.
3: Proof
of identity for example, a couple of recent utility bills, letters etc.
At
this meeting terms of the loan will be discussed and agreed and the loan is
often paid out there and then ... sometimes even in cash!
Normally
you will be able to borrow from just a few hundred pounds and up to tens of
thousands as long as the amount borrowed is less than the value of the vehicle. Most companies will lend up to a maximum percentage of the value of your vehicle - often around 75% so if your car is worth £4,000 you may be able to borrow a maximum of around £3,000. Repayments can be arranged over a term to suit, either a short term fix but subject to maximum term often
set at 36 months.
The
whole process is fast and can often be completed within 24 hours.
Sounds
too good to be true right ... perhaps it is!
The
downsides include:
1: Although
you still keep the car or vehicle the applicant has basically signed away
ownership to the logbook loan provider who then hold the logbook.
2: Ownership
of the vehicle is only returned on repayment of the debt.
3: Interest
rates can be very high to represent the relaxed lending criteria and increased
risk to the lender.
4: Cost
can escalate if payments are missed so read the small print very carefully!
Logbook loans are aimed at those with a bad credit history, money problems and those who are struggling to find credit elsewhere - if you do not fall into this category there could undoubtedly be better options available to you and if you do fall into this category think very carefully before deciding what is right for you and consider if you should be borrowing at all - especially if you have money problems - there may be alternative solutions without the need to borrow, visit
What To Do About Debt for useful information and links to people who can help.
