What You Need to Know About Logbook Loans

Everyone comes at a time when money is tight and what you need is a quick fix solution to get out of the snitch. When it happens, there are different types of loans to take into consideration but one that seems to have gained impressive popularity today is a V5 loan or otherwise referred to as a logbook loan.
If you're planning to get one or if you just heard about the loan, this guide will help you understand what and how the loan works.

What is a logbook loan?

A logbook loan is a type of loan that is secured against your car. The lender keeps your V5 document while you can still your car as long as you make the monthly repayments. In essence, the lender holds ownership of the vehicle until end of term or the loan has been fully paid.
Since the loan is secured, the loan amount is larger starting from £500 to £50,000 depending on the value of the vehicle. Loan term can be as short as 3 months or longer up to 3 years.

How much is the interest rate?

With respect to interest rates or specifically the annual percentage rate (APR), logbook loans come with relatively higher costs than conventional loans from banks. On average, the APR can reach about 400% or more. Fortunately, some lenders are more conservative with their charges offering Representative APRs at around 250% and some even less at 190%.
If you want to make comparisons based on APR, check out Money Co UK's comprehensive list which details APR, minimum and maximum loan amount as well as the loan terms by clicking right here.

What are the requirements?

Logbook loans are known to be quick and fast because the requirements are pretty minimal. As long as you are of legal age, a resident of UK and someone who owns a car, you can expect immediate approval. To further hasten the process, you can prepare the following documents beforehand:

  • V5 or logbook document
  • MOT certificate
  • Insurance document
  • Proof of identification
  • Proof of address
  • Proof of employment

Just remember that lenders have different requirements for the vehicle to qualify. Some requires it to be 8 years old or less while others will not accept if it is beyond 5 years of age. The vehicle should also be free of any financing plans and the insurance should be fully paid.

Where can you get a loan?

Logbook loans are readily available on the high street or online. Many lenders are now setting up online portals to make the application process even more convenient and easier for borrowers. Within minutes, you can fill out the online form, get approved after a couple of hours and receive your money within the same day.
When looking for a lender, just keep in mind to check the company's track record, reputation and years in business. This will ensure that you're going to get a good deal on your logbook loan.

Is a logbook loan for you?

If you need a personal loan and your only asset is your car, looking at a logbook loan as your best option makes sense even if you have bad credit. You can use your car as collateral to raise the funds that you need for any specific personal use. But like with any responsible borrower, you need to know your obligations and responsibilities then stick with it until end of the term to avoid repossession of your vehicle.

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