Getting a Logbook Loan The Right Way

With the economy at risk of sliding into recession, banks have been reluctant and selective in handing out loans. Because of this, people have been looking for newer avenues for financial assistance. Logbook loans have become an increasingly popular solution, especially when compared to the difficult process of applying for a bank loan.

A logbook loan is a type of secured consumer debt and is a fairly straightforward procedure. The loan is secured against your vehicle, and as such, is entirely not dependent on your credit history. For people with bad credit history, a log book loan may be one of a few options to go for when in dire straits.

The load provider takes possession of your logbook, symbolizing proof of ownership. If you default on your payments, the lender can repossess the vehicle as payment for the loan.

How to Get a Log Book Loan

Evaluate your car and make sure it’s in good shape. The loanable amount you’re potentially given depends on the market value of your car; the higher its market value, the bigger amount of money you can borrow. The maximum loan would probably fall around 50% of your car’s value.

Make sure you have the required documents – most importantly, the logbook. This is officially known as the V5C Registration Certificate issued by the Driver and Vehicle Licensing Agency. It is expected to contain a running record of the vehicle’s information and any major modifications it’s ever had.

You as a loan applicant must have a regular stream of income. Much like any other type of loan, the loan provider evaluates its applicants to make sure that they have the capacity to fulfill payment terms. The security of repossessing your vehicle is not enough to get approved.

Logbook loaning companies are widely available around the UK. Repayment plans are typically set in a limited period of around 58 weeks. You will probably need to sign a contract that gives the loan provider the right to seize and resell your vehicle on failure of payment.

Things to be Aware of:

  1. A log book loan is meant to be a short-term loan. Logbook loan interest rates are on the pricey side (an APR of 400% or higher) and falling back on payments can become another financial problem very quickly. Make sure that you not only have the capacity for payment, but also have a backup plan in case making payments turn difficult.
  1. In case your vehicle does get repossessed, if the sale of your car fails to answer for the debt that’s due, you will still need to pay the difference.
  1. Beware of loan providers who make use of questionable tactics. Because of your lack of protection when you fall into arrears, some companies immediately repossess your vehicle if you miss on even a single payment.

Worse, some companies make use of confusing jargon on their contracts that put the loan applicant on a disadvantage. Contracts may give the loan provider the right to enter your property or break into your car.

 Make Sure You Read All The Fine Print Before Signing.

Done right, the logbook loan is a very useful way out of a financial situation. Do your research and be informed to avoid disappointing transactions.  To get a logbook loan the right way go here.