Your Essential Guide to Logbook Loans: What are They, and What are Their Benefits?
There are many different kinds of loans consumers can apply for, but one of the most popular, especially when it comes to emergency situations where you need money in a short time, is a logbook loan. If you’ve heard about logbook loans but aren’t quite sure what they really are and how they can benefit you, here’s what you should know – your essential guide to logbook loans: what are they, and what are their benefits?
How a logbook loan works: the basics
When it comes to loans, the principle behind logbook loans is actually quite simple: if you have a car or other type of vehicle, you can use your vehicle as the ‘collateral’ for a loan. As the name ‘logbook loan’ implies, you simply have to give your vehicle’s logbook or registration to the lender when you take out a logbook loan. The lender will hold your vehicle’s logbook until you are able to repay the loan in full, with interest. Of course, one requirement is that you are the registered owner of the vehicle, hence the surrendering of your logbook and registration documents. You can’t take out a logbook loan if you don’t own the vehicle, in other words.
For those living in England, Northern Ireland, and Wales, taking out a logbook loan also means that you will have to sign a form referred to as a ‘bill of sale’ as well as a credit agreement, which states that the lender will become the temporary owner of your vehicle until the loan is repaid. The lender will have to register this ‘bill of sale’ with the High Court so it will be valid. If the ‘bill of sale’ isn’t properly registered, the lender will have to request approval from the court before they can repossess the vehicle if you haven’t been able to pay back the loan. For those living in Scotland, a ‘bill of sale’ is not legally valid, so lenders are using other types of credit agreements or arrangements.
What’s good about a logbook loan is this, however: even whilst the logbook or registration is with the lender, you can still use your vehicle. You will not be left without a vehicle during the duration of your loan repayments. This is an added convenience to those who are worried about losing the use of their vehicle whilst repaying their loan.
You can avail of Log Book Loans online or through High Street lenders, but if you are looking for a faster processing time, applying for a logbook loan online is a better option.
How much can you borrow?
With logbook loans, the amount of money you can borrow will basically depend on the type of car or vehicle you have – in other words, how much your vehicle is worth. If you have a high-end vehicle, then you can expect to receive a greater amount for your loan, although with logbook loans, only about half of the vehicle’s value will be lent to you. In essence, you can borrow from between £500 and £50,000 based on the value of your vehicle.
How you get your money
Some logbook loan lenders will give you your money by cheque, but this will take a few days before it’s cleared. Other logbook loan lenders offer a faster service by giving you cash, but they may charge a fee for this as well.
How you pay back the logbook loan
Often, logbook loans have longer terms for repayment, but the average repayment term for most is about 78 weeks. Keep in mind that some arrangements may require you to just repay the interest until the final month of the contract, and in the final month, you may be required to repay the total amount of money you initially borrowed. It’s therefore important to read through the agreement as thoroughly as possible so you are fully aware of what to expect and so you will know exactly how much you need to repay.
One tip: the APR or annual percentage rate of logbook loans can be quite steep, so it’s always best to repay the loan as quickly as you can. If you aren’t able to repay your loan, the lender has the right to seize your vehicle without going to court, so you should consider your options carefully before you make a decision. You can check out the different Logbook Loans at Creditpoor offered by various lenders to get a better idea of the best deal for your needs.