Sometimes it can be difficult to find a loan, especially if you have poor credit history. When an emergency arises, such as a sudden unexpected bill or a broken washing machine, getting money as soon as possible is your biggest worry.
If you own a car, getting some money soon could be easier than you thought. With a simple application process, you could be paying all your emergency bills on the same day. As long as:
- You own a vehicle which is taxed
- Have a car that is not more than 8 years old
- Do not have any kind of financial claim under your car
- Are a permanent resident of UK and an adult of 18 years of age or more
- Have a bank account in a reputed bank organization which is at least three months old
You could be eligible for a logbook loan.
Logbook Loans Explained
Logbook loans are loans secured against your car, so the lender owns your car until you pay the loan back. You can keep on using your car as long as you repay the loan. The loan is secured using a Bill of Sale in England, and this is the paper which transfers legal ownership of the car to the lender until the loan is full paid.
How it Works
When you apply for a logbook loan you will be asked to hand over your car’s logbook or vehicle registration document, which proves you are the legal owner of the vehicle.
You will also be required to sign a credit agreement and a form called a Bill of Sale. This document transfers legal ownership of the car to the lender until the loan is repaid in full. For the duration of your repayment period, the lender owns your car on a temporary basis but you are still allowed to use it as long as you meet all loan repayments.
The law only recognises a Bill of Sale if the logbook lender registers it with a United Kingdom’s High Court. If it’s not registered, the lender must get a court’s authorization to re-claim your car. It’s therefore important to check if the Bill of Sale is registered.
How Much Can I Borrow?
You can borrow between £250 and £50,000, depending on the value of your car and your ability to make repayments. You are only allowed to borrow up to 50% of your car’s worth. So whether you have a large or small emergency, you can find a solution in your vehicle. Whether you choose to make your repayments monthly or weekly, you can find a loan that suits your need.
What are the Requirements?
In order to ensure a hassle free loan application, make sure you have the following:
- Your vehicle’s MOT certificate
- Your car’s logbook or V5 document
- Proof of income (bank statements or Pay slips)
- Your vehicle’s insurance records
- Proof of identification with passport or government issued ID
- Most recent bills containing your permanent address
Paying the loan back
Most logbook loans take 78-weeks, although you are allowed to pay it off earlier. Your regular payments may only be repaying the interest charges until the last week of your agreement, when you will be required to repay the loan itself. It’s important to understand how the contract works and you must be able to pay back the lender.
What it Costs
Interest charged is usually about 400 per cent APR or higher and is charged on the loan amount each week. For example, if you borrowed £1,500 and paid £55 every week for 78-weeks, you would pay back over £4,250 in total. This means you would have paid over 2,750 pounds in interest in order to borrow 1,500 pounds. (Source: Lendingexpert.co.uk) It’s therefore advisable to pay your loan as soon as possible.
Benefits of Securing a Logbook Loan
Generally, a car is one of the most financially valuable assets we own yet some individuals do not realise they could use it to borrow money. One popular aspect of this type of secured loan is that it allows the car’s owner to retain the use of the car. While repaying the loan, the lender will simply retain your logbook or V5 document. You will also get your money within the same day of successful application and choose among a variety of repayment options.
What will happen if I can’t pay back my logbook loan?
Logbook loans lenders have legal rights to employ bailiffs to seize your vehicle if you don’t meet repayments, although most will not sell your car until you have failed to pay back several repayments. The lender would not need to go to court to reclaim your vehicle.