A logbook loan is a kind of a secured loan where the lender takes the borrowers V5 document as security for the loan. However, that’s the far that the creditor goes. You get to keep your car as you make payments. This means that the creditor legally owns your car for the period of the loan, and if you default payments, it is within the law to collect it from you. Therefore, ensure you do some thorough research so that you understand the fees, the terms of payments and the reputation of the lending company.
When applying for a logbook loan, there are some criteria that must be met. First you must be the legal owner of the vehicle you use against the loan. You must also be a citizen of the UK who is 18yrs and above. Remember, to have these documents ready when taking out a logbook loan.
Things you need to know
It is also important to know that the amount of money you borrow will depend on the value of your car. This does not depend on the type of vehicle since any vehicle that is roadworthy is good to go. In order to get the maximum value for its money, get your car independently valued. Alternatively, ensure you understand the means the lending company uses to value cars. This way you will be able to challenge them in case you feel you deserve more than offered.
One of the nicest things with a logbook loan is that you can continue using your car as you make repayments. This means that even if it was used as loan collateral, you won’t have to go commuting everyday using public transport.
You may still be able to get a logbook loan even if your car has existing finance against it. However, this usually applies when the existing loan is almost completed and only if you have permission from your current lender.
Using your car against a loan does not mean that you cannot sell it. If in the course of the loan period you choose to sell your car, then go right ahead. However, bear in mind that you are still responsible for the remaining balance unless you have an agreement with your buyer to pick up the payments from you. If that’s the case, ensure you inform your lender about the changes. Otherwise if you default on your payments you may fall victim to penalty fees and worse still losing your case.
One of the things to consider before taking a logbook loan is the condition of your car. Ensure it is in its perfect state. Most importantly, you need to have other supporting documents that prove how you have been taking care of you motor vehicle. A logbook loan will best serve you in times of an emergency. So when you want to inject some urgent cash in your business, look no further.