Taking out an unsecured loan can be minefield for those who have a less than perfect credit history with many mainstream lenders tightening their belts in recent years. Secured loans have long been the way for those with poor credit to gain better acceptance rates, but with more people renting their homes rather than buying them these days, it’s becoming more and more common for borrowers to use their vehicle as collateral instead.
Logbook loans are a great way for vehicle owners to get the most out of their cars, vans or motorbikes by offering these as security to lenders in exchange for a short to mid-term loan. Let’s take a closer look at how logbook loans work.
What Are Logbook Loans?
The logbook is the document that comes with all vehicles and lists the existing owner and ownership history. With a logbook loan, you’ll sign over the ownership of your vehicle to the lender, offering them added security that the loan will be repaid on time and in full.
You’ll continue to have full use and access to the vehicle at all times during the credit agreement, as long as you keep up to date with your monthly repayments. As soon as the loan has been completely repaid, the lender will reassign the vehicle ownership back to you. Need additional finance straight away? Once your loan has been repaid, you’re free to use your vehicle straightaway for another logbook loan.
As well as reassigning your logbook to the lender, you’ll also need to provide a bill of sale which is registered with the High Court.
As with more traditional loans, once your application has been accepted you’ll receive a full breakdown of the total loan amount, total amount repayable, a payment schedule highlighting each payment and interest amounts, and an end date for your loan. If you ever need to extend this then simply get in touch directly with your lender and they’ll assist wherever they can.
Alternatively, you may choose to accept a logbook loan on an interest only basis. In this scenario, you’ll only pay the interest each month in order to keep costs to a minimum and will then be required to pay back the full amount originally borrowed in the final month of your agreement.
Who Are Logbook Loans Suitable For?
Logbook loans are ideal for those who are struggling to get unsecured credit due to a poor credit score, or for those who are looking to reduce the interest rate on an existing unsecured loan by offering a vehicle as collateral.
They are typically offered for up to 18 months so aren’t suitable for those looking for longer term financial assistance, however most lenders now waive early repayment charges which can reduce the overall amount you repay.
Can I Have More Than One Logbook Loan?
Yes! As long as you can prove that each logbook loan you take out can be comfortably repaid then there’s nothing to stop you from having more than one logbook loan. However, you can only take out one logbook loan on each vehicle and there must be no finance already attached to it.
For example, if you purchased a car using a hire purchase agreement, then you technically do not own that vehicle out right. This would stop you from taking a logbook loan out on this car as you would not have the authority to transfer ownership over to a third party.
How Can I Apply For A Logbook Loan?
Logbook loans are very simple to apply for. It all begins by completing your initial application form here at Creditraters.com We’ll use this information to compare logbook loans from both mainstream and independent lenders from across the UK.
You’ll need to let the lender know the exact make and model of you car by inputting the registration plate. There are minimum vehicle value criteria, some starting at just £250, so do make sure that your vehicle qualifies before submitting a final application to logbook loan lenders. Some of the most reputable logbook loan lenders will ask that your vehicle is independently valued prior to offering final acceptance terms.
Applications can be assessed within a matter of hours with some lenders offering same day payouts once accepted. Your loan will run for a maximum term of 78 weeks however, by law, you have the freedom to pay it off earlier if you can and want to.
Begin your application today with Creditraters.com and use your vehicle to add some much needed funds to your bank account.