Every Customers Guide to Logbook Loans
Like any responsible borrower, one of the first things you need to do when considering a loan is to know what and how the financial product works. This is especially true for the case of logbook loans or for any types of loan for that matter. While it is convenient and easy to avail, you have to remember that there are financial consequences too in case you failed to make payments.
Before deciding on getting a logbook loan, here are basic but important details about the product every customer should be aware of.
The Basics of Logbook Loans
First off, what are logbook loans? As the name suggests, it is very much like homeowner loans where you need collateral to secure a loan. In this instance, you'll need a vehicle you legally own to serve as collateral in order to get approved.
Unlike homeowner loans, however, logbook loans offer smaller yet still flexible amounts. Depending on the value of your car and your income, you can borrow from £500 to £20,000 at terms starting from 3 months to 3 years or some up to 5 years.
Who can apply for Logbook Loans?
Anyone who is at least 18 years of age, a resident of UK and a car owner is welcome to apply for a logbook loan. You can be fully-employed or self-employed. It doesn't really matter as long as you can prove your source of income. For most logbook loan lenders, the most important requirement they look at first is your car'. It should be free of any financing and it should also be less than 8 years of age on average.
If you've tried borrowing from banks and have been turned down a number of times due to bad credit, getting a logbook loan is your ideal option. With logbook loans, as long as you own your car, you can apply and get approved regardless of credit history or credit rating.
How much are the Interest Rates?
With respect to interest rates, it's understandable that logbook loans come with higher annual percentage rate (APR) than conventional loans. After all, lenders are taking a risk on you hence the higher rates.
On average, APR for logbook loans is at about 400% or more. Some lenders are breaking free from the norm offering almost half of the average APR in the industry. One example is Car Cash Point which offer logbook loans from £500 and £50,000 for terms starting from a day up to 5 years. The company's Representative APR is 230.7%.
If you want to compare top lenders in UK according to their APRs, you can do that at http://paydayloans.money.co.uk/logbook-loans.htm.
What happens if you miss repayments?
To get approved, your lender will have to keep the logbook or V5 document while you get to keep and still use your car. In essence, temporary ownership is granted to the lender until end of term and you completed payment.
Upon approval of the loan, it is expected of you to make consistent and on-time monthly repayments. In the event that you miss or delay on your dues, you can speak with your lender to make arrangement. In case that you miss several more repayments or opt for default, you put your car at risk of repossession. If no payments are still made, the lender will have to make their move and if you signed a bill of sale agreement, they can sell it even without a court order.