A look at the features and requirements of Logbook loans
The undeniable truth is that every once in a while, we might run into financial problems and seek for urgent credit to set things in order. When this happens, we can resort to seek for credit from high street banks or mainstream financial lenders. However, while it is easier said on paper, the reality of things is that getting approved for a loan when you have bad credit from a high street bank is an exercise in futility; a tall order. For this reason, UK individuals with a poor credit rating have found refuge in logbook loans.
Essentially, logbook loans are suitable for individuals who are cash strapped but have a poor credit score. Logbook loans are popular with UK individuals who have a poor credit score because of the fact that credit checks are given a wide berth. This sole feature is without a doubt the biggest selling point of logbook loans. The loans are secured by a vehicle, a motorcycle or even a van provided that the car logbook is clear of any financial attachment. In essence, your car cannot be accepted as collateral if there is some form of financial attachment to it.
Consequently, any unpaid taxes or insurance owed to the car will have to be paid off before the specific car or van can be accepted as collateral. This is not the end of it as the car to be used as collateral must be registered in the name of the person seeking the loan. What this means is that a person cannot use a friend’s car and use it as collateral. On the same wavelength, the car to be used as collateral must be in good condition and must not have been on the road for more than 10 years. It is for this reason that UK logbook loan lenders require that you produce a Ministry of Transport (MOT) certificate prior to approval.
If you think that you can get a logbook loan and thereafter sell your car, you are in for a rude shock. The rules of engagement are that the car must remain in your own name for the duration of the loan. What this alludes to is that you can only sell your car after you’ve cleared your logbook loan and ownership of the car returned to you by the lender.
To digress a bit, it’s imperative to note that the condition of the car is not the only requirement to be approved for a logbook loan. You must also show proof that you receive a regular stream of income either from gainful employment or self-employment. This is to simply impress upon the lender that you are capable to repay your loan without struggling. You can get cash access up to 70% of your cars value and this is one of the things that make logbook loans very popular as you can use the cash to accomplish something substantial.
While we have so far tackled the features of logbook loans, it’s imperative that we also look at the risk. One of the risks of taking out a logbook loan is that the interest rates are so steep that you might end up repaying twice the principal amount. Consequently, if you fall back on your repayments for a couple of months, the lender might repossess your car.