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Logbook Loans: What you need to know

Because of how easy and quick the loan process is, logbook loans have become an ideal solution for people with immediate financial needs in UK. But just like with any type of loans, there are risks involved. It is an excellent alternative if you need fast solution but at the same time, it makes sense to know more about logbook loans.

Before using your car to secure a logbook loan, here are some things you need to know:

Fast Cash and Loan Amount

When it comes to borrowing money, logbook loans are one of the fastest means to get cash. There are no credit checks involved hence same approval is usually the case. The borrower can borrow from £500 to as much as £50,000 depending on the value of your car. Normally, lenders can loan you up to 50% of your car's worth.

Applying for a Loan

To apply for a logbook loan, all you need is your own vehicle to serve as collateral. The lender will keep the logbook or the vehicle's registration document. You may also need to sign a credit agreement, a "bill of sale" in particular, as part of the application process.

Getting the Loan

Upon approval of the loan, you can get it in the form of a check or quick cash service. Checks usually take days to clear hence majority of lenders offer quick cash services allowing you to get the money within 24 hours or less.

Choosing Repayment Terms

Depending on the amount and your preference, you can choose the most suitable repayment terms. In general, a logbook loan runs for 18 months and sometimes less if that's what you prefer. Many lenders also offer terms of 2 to 3 years to allow flexibility.

Paying the Loan

Payments are often made on a weekly or monthly basis. You can repay the interest charges until the last week or month of the term. The last month is when you are expected to pay the loaned amount. In case you want to pay off the loan earlier, you can do so to reduce interest rates. The key is to speak with your lender and make the necessary arrangements for repayments that you can afford.

Costs and APR

Lenders in UK generally offer logbook loans with about 400% or more APR. For instance, if you're borrowing £1000 for the duration of 18 months, your weekly payments will amount to £35.90. The amount is based on a fixed interest rate of 120% making the total amount payable to £2800. In total, the representative APR will be 442.66%.

To compare APRs among UK's top logbook lenders, you can visit this website here.

What happens if you can't pay back

In case you fail to make repayments of the loan, you have two options. You can make alternative arrangements with your lender or you risk your vehicle being sold. Lenders will not usually repossess your vehicle unless you've fallen behind for several months. Since they have the logbook or the V5 document, the lender has the right to sell your car without the need to bring it to court.

The Bottomline

A logbook loan is an ideal example of a quick fix solution to many of your financial problems. It is fast and easy to avail with the promise of giving you the cash within a day. All you need to do is use your car to secure the borrowed money. As a responsible borrower, however, you need to make sure that you can afford the repayment terms to avoid the risks of losing your car and high interest rates.