Logbook Loans Explained in Detail
Loans secured against your vehicle are called logbook loans. In this type of loan, the lender is given ownership of the car until you fully repay the loan. The vehicle remains with you and you can use it as normal but legally it belongs to the lender until the loan period. So, it is a temporary ownership of the lender.
These loans are a riskier alternative than borrowing mainstream secured loans. In case you fail to repay the loan, the lender can actually take away your vehicle. In addition, if the lender does not get the total amount that you borrowed by selling the car then you are responsible to pay him the remaining money.
They can drag you to court in the event of non-cooperation from your side. This form of borrowing should be tried only when you have a bad credit history or need some quick money in case of a crisis.
How do logbook loans work?
You can borrow an amount equal to the exact worth of your car. Starting from £500 up to around £50,000 or more from the lender. Most of the lenders do not lend the exact amount of the car but settle for offering a little less than the actual value of the car. If you want a bigger amount than the worth of your car or any vehicle then this type of loan would not suit you.
You are eligible for a logbook loan only if you own a vehicle with a value above £500 and with no outstanding amount on it. In some cases, if you have an outstanding amount then you can ask your existing lender to permit you for a logbook loan. You need to prove your ownership of the vehicle by showing its registration number and its logbook.
Make sure you read the credit agreement carefully so that you are aware of the payment deadlines and penalties of missing payments. Be sure that you will be able to make your repayments, if not you may lose your car. Analyse if this money crisis is worth your car. If yes then only go for this loan. On handing over the documents of the car, you will get the cheque of the loan. It will take few days to get this cheque cleared and so, you should plan accordingly.
Some of the logbook lenders will offer you the cash but they charge 4% extra for it. Normally, the repayment period of this kind of loan is around 18 months but some of the providers allow you to repay it earlier. Be very clear in your verbal and written communication as some of the lenders may ask you to pay the interest initially and the rest back in the last few payments. In such cases, you should save your repayments as the lender may ask for it anytime.
Are logbook loans cheap?
Well, that is how they are advertised but in reality they prove to be very costly, be it online or on the high street. They are riskier than other types of loans and credit cards. They have an APR of around 100% or 300% which is a truly costly thing. It is better to go for a secured loan than a logbook loan. Think and compare all other alternatives to logbook loans.
For more details and logbook loan comparison, you can check freepricecompare.com. You can also call us on 02034757476.