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From £1,000 to £25,000
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Representative example: £500 borrowed for 5 months. Total amount repayable is £991.85 in 5 monthly instalments of £198.37. Interest charged is £491.85, interest rate 236.1% pa (variable). Representative 481.6% APR.
Logbook Loans UK: What you Need to Know
All over the world, people are using road worthy vehicles as security assets in taking out a quick loan. In the United States they call it car title loans while in the UK it is popularly known as logbook loans. As the name implies, logbook loans utilize a borrower’s V5 document or logbook as a form of collateral. Thus, when taking out the loan, you will have to temporarily surrender your vehicle’s V5 document to the lender – transferring ownership rights to the lender as a result. But as long as you make the proper repayments, you can still use the vehicle even though you have not paid back all the money that was lent to you.
Log Book Loans UK
When taking out this loan in the UK, there are several important things that you need to bear in mind to have a better understanding on how the credit works. They can be summarized in six essential points, namely:
The loan utilizes vehicles as a form of security
Borrowers can still continue to use their vehicles even if the loan has not been completely paid off
How much you can borrow will depend on the value of your vehicle
To become eligible for the loan, you must be currently employed and enjoying a reliable income stream
You need to be the legal owner of the vehicle being offered as security
The log book loan industry operating in the UK is regulated by the Financial Conduct Authority (FCA).
Log Book loans and Other Short-term Loans
Although a lot of borrowers in the UK are unaware of it, log book loans work pretty much the same as other types of short-term loans. You make an application for the loan, your application is then evaluated by the lender, and once you have met the lender’s eligibility criteria, you are then approved for the loan. Money is then transferred to your bank
account in an instant with the expectation that you will pay it back in small chunks by week or month. The only difference, however, is that compared to other short-term loans, this loan is granted against the value of a vehicle and the vehicle is utilized as a form of collateral. You can say that this kind of loan is a short-term, secured type of loan that provides faster and easier applications and payouts than most traditional loans offered by banks and other mainstream lending institutions.
Guidelines to Follow
When taking out this type of short-term, secured loan, there are various guidelines that you need to follow. Knowledge of such guidelines will help in determining whether or not you are eligible for such a credit. They include:
Must prove to the lender that you are financially capable of paying out the loan through your income and current employment details
Proper documentation on your vehicle is required. Aside from showing your vehicles valid MOT certificate, you must also provide insurance details.
The vehicle must be solely owned by you. It must not have any form of outstanding hire purchases or leasing deals attached to it.
The logbook or V5 document must state your name as the legal owner of the vehicle
You must be over 18 years of age and must have your own bank account that can accept money transfers.
The lender has the legal authority to seize your vehicle should you choose to default from your payments.
Missed payments will incur penalties in the form of extra charges and interest rates.
The loan is secured through a bill of sale which gives legal ownership of your vehicle to your lender until the loan is paid back in full.
Why choose a logbook loan?
It is simply challenging to secure financing from major banks and traditional lending institutions if you have a bad credit history or a credit history that does not exist at all. If you have a road worthy vehicle at your disposal, taking out a log book loan can be a great way to cover dire financial needs. You can use the vehicle as security and get the money that you need without your credit history getting in the way. After you have received the money, you can then decide to repay it through weekly or monthly instalments until everything is paid back in full. The choice is yours and it’s up to you to decide on an effective payment scheme that will better suit your current financial situation. And most importantly, you can still enjoy the utility of your vehicle while you’re making the instalment payments, It’s that convenient!
What Do I Need To Do For Logbook Loans?
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Hi There My Names Martin! I’m a huge sports fan fancy myself as the next Lionel Messi.. Ive been writing for the last ten years mainly in the financial niche.