Guide on How Logbook Loans Work

Though popular in the UK, logbook loans continue to draw controversies for its high cost and high risks. Despite the associated risks, however, customers still resort to the financial product for immediate and unexpected emergencies. Borrowers with bad credit in particular consider logbook loans as among the most accessible personal loans available in the market today.

If you’re in the market hoping to get approved for a logbook loan, understanding how it works will help you make the best decision. Here’s your quick guide to logbook loans.

What are logbook loans?

Logbook loans are secured personal loans offered specifically for people with bad credit. The financial product does not require any credit check hence a higher approval rate despite a poor credit history. To be eligible, you just need to meet the basic requirements and your application is usually good as approved. For more information on logbook loans, click here.

Who can apply for a logbook loan?

Anyone who is of legal age and who resides in the UK is eligible to apply. But the most important requirement is for the borrower to be a car owner. You will need to use your vehicle as security for your logbook loan. In addition, you’ll need to provide proof of income to prove your financial capability to handle the monthly repayments.

What are the requirements?

To speed up your logbook loan’s approval, borrowers are recommended to prepare the needed documents prior to applying. Among the documents you need to have ready includes your vehicle’s logbook document, MOT certificate as well as your tax and insurance details. You’ll also have to prepare proof of identification, income and billing details.

How much can you borrow?

Since you’ll be securing your logbook loan against your vehicle, you can borrow a larger amount than if you apply for an unsecured personal loan. Most lenders, in general, offer loans between £500 and £50,000. The maximum amount you can avail is up to 70% of your car’s official trade value, which you can use for a variety of financial needs.

How long is the repayment term?

When it comes to the repayment terms, logbook loan lenders allow borrowers to repay the loan over 12 months up to 36 months. You can opt to repay it twice a month or once a month. For convenience, we recommend setting up a direct debit arrangement. This is also so you never miss or delay a payment thereby reducing added fees or charges to your monthly dues.

How much does a logbook loan cost?

Though secured against your car, logbook loans can still be very expensive. Considering that the main customers are people with bad credit, lenders are taking higher risks than usual. To compensate for said risks, lenders charge higher interest rates on logbook loans. In fact, the representative APR for logbook loans is set at 400% or sometimes more. But thanks also to stiffer competition, there are now lenders offering cheaper interest rates. You’ll just need to find the best deals in the market in order to enjoy a cheaper logbook loan.

Should you take out a logbook loan?

If you have bad credit and you need quick cash, logbook loans offer just the perfect solution. But at the same, you also need to consider the risks and cost involved. At the end of day, it’s really about you being a responsible borrower. The trick is to ensure that you can pay the monthly dues on time to avoid risks of repossession and added cost to your logbook loan.