How Logbook Loans Work

Logbook loans are among the most popular personal loan options for borrowers in the UK. The financial product is advertised as a quick fix solution to a variety of pressing financial problems such as overdue bills, medical emergencies or home renovation among other things. Logbook loans, however, are considered expensive and risky by many experts. If you're planning to apply for one, it is imperative to take your time to understand the product especially the risks involved.

Who are Logbook Loans For?

Because logbook loan lenders do not run credit checks, the financial product is ideal for people with bad credit who owns their free or nearly free of financing vehicle. Other basic requirements include the borrower being of legal age (18 years old or older) and a resident of UK. Self-employed, part-time or full-time employees are all welcome to apply for the loan. The only important detail is your car to be legally registered under your name. Depending on the value of your car, you can borrow between £500 and £50,000.

Where to Apply for Logbook Loans?

Logbook loans are available on the high street but more rampantly online. With demands for the financial product increasing so does the number of online lenders offering said product. So long as your lender is reputable with a strong track record, you can now opt to apply from the comforts of home. Simply fill out the online application form. Once the requirements are verified and your situation assessed, you should expect approval within the same day. The money is then wired to your account within 24 hours upon approval.<

How to Repay the Loan?

Majority of logbook loans used to run for 78 weeks. Most online lenders today, however, are trying to be more flexible allowing borrowers to repay the loan up to 3 years. Repayments can be paid weekly or monthly which again will depend on your preference. As a simple rule, borrowers are advised to make an arrangement with your lender that is comfortable enough for your budget.

How much does the loan cost?

Interest rate for logbook loans is typically around 400% Representative APR. Some lenders may offer less than that but bleed you out through hidden charges while others offer even higher than 400%. Either way, the cost is considered by experts as pretty steep for a personal loan. Before taking out a logbook loan, make sure you know the real cost.

How does Logbook Loans Work?

When taking out a logbook loan, temporary ownership of your vehicle is handed over to your lender. You get to keep and use your car while the lender keeps your V5 or logbook document. Most logbook loan lenders will also asked you to sign a credit agreement and a "bill of sale." With the bill of sale in the picture, your lender has been appointed the right to sell the vehicle in the event of repossession.
Repossession happens when payments have been missed for several months. At first, your lender will only send a debt collect to collect the payments. If you continue to miss your due dates, the lender's last resort is to repossess and sell your car to cover for your debt.