Quick Guide to Logbook Loans
One of the quickest loans to apply for when you need money fast is a logbook loan. It is readily available online and on the high street offering flexible loan amounts and terms to anyone needing quick cash even those with bad credit.
While the financial product has been very popular in UK, it still pays to know more about the loan before getting one.
What is a logbook loan?
A logbook loan, otherwise known as a V5 loan, is a type of loan that is secured against your vehicle. Much like a homeowner's loan, your car serves as collateral to get approved for the loan application.
What are the requirements?
As the name of the loan suggests, the main requirement is your logbook or V5 document. You have to hand it over to your lender together with the MOT certificate, insurances details and proof of identification, address and employment. Lenders also specify car requirements. Typically, it should be 8 years old or less and it should be free of any financing.
For a more in-depth discussion of logbook loans, head over to http://www.whatisalogbookloan.com/, a blog which talks about anything related to the financial product.
How about loan amount and terms?
Loan amount ranges from £200 to £25,000 or sometimes as much as £50,000. The maximum amount you can borrow will depend on your vehicle's value that is up to 50% of the official trade value.
Normally, a logbook loan term lasts 78 weeks. But most lenders are now offering flexible repayment periods of up to 3 years.
How much is the interest rate?
The average annual percentage rate or APR for logbook loans is about 400% or more. Compared with conventional loans, the interest rate is higher but definitely lower compared with payday loans. The rate is justified by lenders as reasonable considering that the loan is meant only for short-term and it’s very easy to avail too.
How long does approval take?
Most online lenders nowadays offer same-day approval for loan applications. That means you can receive a response within minutes from completing the form. In most cases, the money is received within 24 hours after approval.
Who keeps the car?
When approved for a logbook loan, the lender will only get your V5 or logbook document while you get to keep your car. This is another draw to the financial product. You still get to use your car even if it is used as security for the loan.
How do repayments work?
Depending on your loan term, repayments can be made weekly or monthly. It can be in the form of a cash, check or credit card. Again, this will depend on your set-up with lender.
As the borrower, it is your responsibility to keep tabs on your repayments. You should also make sure to send it on time to avoid additional fees.
Is it possible to repay the loan early?
Yes, it is possible to shorten the loan term by repaying early. Before doing this however, you need to confirm if your lender has early repayment charges or fees. If there are, might as well stick with your term until fully paid off.
What happens if repayment is missed?
In the event that you missed one payment, most lenders often allow borrowers to make-up for it until the next repayment schedule. Missing several repayments, however, is a different story. If you continue to miss them even a debt collector hounding you, the next step for lenders is to repossess your car and eventually sell it to cover for your debt.