Logbook Loans: Guide for First Time Borrowers

If you have bad credit but you need a large amount of money to meet a financial emergency and you need it fast, logbook loans seem like the best alternative to traditional personal loans. As a first time borrower, you’re certainly attracted to the promise of quick cash. But you should also know that there are other factors to consider in order to come up with a sound decision at the end of the day. This guide was created to help you better understand logbook loans.

What is a logbook loan?

Logbook loans fall under the category of secured loans. This means that you need security or collateral when you apply for this loan. The loan will be secured against your vehicle allowing you to borrow between £500 and £25,000 or sometimes more depending on your income and vehicle’s trade value. If you have a sports car, for example, and it’s free of financing, you can probably borrow as much as £50,000. In terms of repayment, logbook loans are required to be repaid over a 12 to 36-month period. For additional info on logbook loans, Money Advice Service offers a wealth of useful info and details.

Who can apply for a logbook loan?

If you have bad credit but you’re a vehicle owner, you can apply for a logbook loan. Assuming that you meet all other requirements, you just need to make sure your vehicle is not attached to any financing plan. If you can provide the logbook document, MOT certificate, and other required documents, you can borrow as much as 70% of your vehicle’s official trade value.

How does a logbook loan work?

When you apply for a logbook loan, you don’t have to hand over your vehicle to your lender. Your lender only needs your vehicle’s V5 document in addition to a signed credit agreement and “bill of sale” document. This means you can still keep driving your car like you always do. When approved for a logbook loan, what happens is that the loan is only secured against your vehicle. It’s a type of guarantee for lenders that they’ll always be on the winning end. If you keep paying your dues on time, you shouldn’t worry about other complications. If you fail to repay your loan for a few months, however, then you should start worrying about the possibility of losing your vehicle to repossession.

Is the loan for you?

Considering the risks and costs as well as the advantages of the financial product, the last thing to ask yourself before you sign a deal is this: Is the loan suitable for your needs and budget? While the loan may meet your need for quick cash, it doesn’t make the financial product a suitable loan option. You also have to consider your budget. Like with any type of borrowing, you need to make sure you can afford the loan including the high-interest rates and the risk of repossession before you go ahead with the loan application.