Logbook loan

Logbook Loans Explained

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We all hit a financial emergency or two at one point or another. If you have a sufficient emergency fund then this financial bump wouldn’t hurt. However, the same is not the case for most people. When you don’t have ample savings to tide you up until you’re on your feet financially, taking out a loan is inevitable.

Logbook loans, in particular, are a popular option for people with bad credit. Logbook loans have helped thousands of borrowers in the UK. And if you are planning to take out one, understanding the financial product would help. And we’ve created this guide to help you do just that.

What is a logbook loan?

Logbook loans are secured loans offered for people with bad credit. Even if your creating is less than perfect and you’ve been rejected for a loan elsewhere, you can count on this financial product to save the day. Logbook loans, in essence, will cash in on your vehicle’s official trade value. This puts your vehicle as collateral for the loan, which also means you can borrow more, usually up to 70% of the vehicle’s trade value.

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How much can you borrow?

With logbook loans, the usual offers start from £500 up to £50,000. Repayment terms, on one hand, start from 12 months up to 36 months. For smaller loan amounts, the term may sometimes last only for weeks while for larger loans, the term may be extended to longer than 3 years. Either way, your goal as borrower is to never miss a payment to avoid hefty penalties.

Who can apply for a logbook loan?

Anyone who is a vehicle owner and who lives in the UK can apply for a logbook loan. Naturally, you have to be of legal age as well as working full time to be eligible. One of the major things your lender will need is your proof of income in the form of your recent pay slips. Sometimes, they’ll even ask you to provide bank accounts just to prove that you are financially capable to repay the loan. Other documents you need to prepare include you vehicle’s MOT certificate, insurance and especially the logbook document.

How much does the loan cost?

Logbook loans can be very costly. Considering that it is a loan specific for borrowers with bad credit, the interest rates can be pretty steep. In fact, the representative APR for a typical logbook loan deal is 400% or more. Compared with traditional loans from banks for borrowers with bad credit, the difference in interest rates is astounding. But such is one disadvantage and consequence you need to embrace for having a poor credit history.

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What are the risks involved?

Logbook loans are not only costly but it’s quite risky as well. The high risks involve the possibility of losing your car to your lender. When you get approved for a logbook loan, you’ve essentially agreed that ownership is no longer yours until the loan is repaid in full. But then a lot can happen in between. If you stumble into another emergency and you miss several repayments for your loan, your lender may enact on the nonpayment by recovering your vehicle. If this happens, you have to update your payments as soon as possible to get your car back again.

Should you apply for one?

Because logbook loans are risky, you should only apply for a deal when you know you can handle the monthly repayment without hitch. Like with other loans, there’s no secret. You just need to be a responsible borrower and repay your liabilities on time each month to avoid repossession.

Loan Options

5 Loan Options for People with Bad Credit

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People with bad credit often have a hard time getting approved for a loan especially from major banks and lenders. This is understandable considering the borrower’s poor credit history. There’s too much risks involved on the part of the lender that you’ll probably get your application rejected if you have bad credit. In this case, bad credit loan options may come in handy.

Bad credit loans, as its name suggests, exist to cater to people with bad credit. There are different types of bad credit loans available in the market and below are some of the most common options you can check out.

Payday loans

Payday loans are popular in the UK and for good reason. If you are employed and you suddenly need quick cash, payday loans offer a convenient solution to your financial emergency. It’s convenient because approval is fast and the requirements minimal. So long as you can provide proof of income, your application is as good as approved. You can borrow from £100 up to £1,000, which you can repay on your next paycheck. On the flip side, the loan is astoundingly costly at 1,000 representative APR on average.

Doorstep loans

Doorstep loans are personal loans for people with bad credit. The offers usually start from £100 up to £1,000 or maybe more depending on your financial situation. Like payday loans, the attraction of this type of loan is its offer of convenience not to mention the quick, hassle-free cash when you need it most. The loan is brought directly at your doorstep hence the convenience. If you meet the requirements and you want to apply for the loan, you can get approved in 24 hours or less.

Guarantor loans

Guarantor loans are not as easy to get approved for as the other two loans above but this one offers larger loan amounts. With guarantor loans, you can usually borrow from £500 up to £7,500 or sometimes £10,000. But in order to get approved, you need to meet one key requirement. You need to provide a guarantor who will agree to co-sign the debt agreement with you. And it’s not just any guarantor. The guarantor must be of legal age, a UK resident who is a homeowner and he or she must have good credit. If you can find a guarantor, you’re in luck because then you’ll be able to enjoy this type of loan’s lower interest rate.

 

Logbook loans

If you need a larger amount of money for a financial emergency or any major personal need, logbook loans may be the best option for you. Unlike the other loans, this one is a secured loan that involves your vehicle as collateral. This means you can borrow more, usually from £500 up to £50,000. But the flip side is you’re risking your vehicle to repossession in case of missed payments. You can lose your vehicle, which means extra caution is needed if you’re going to opt for this type of loan.

Peer to peer loans

Peer to peer loans are another type of loans that are becoming more and more popular in the UK. Rather than go to banks to take out a loan, you can go online instead and borrow directly from a “peer.” The peer is your borrower, which means no middleman. The interest rates are usually lower than most types of bad credit loans. Most lenders in this platform, however, may require you to have good credit to be eligible for a loan. Fortunately, there are some who understands your situation who is still willing to lend you money even with bad credit. Your job is to look for those lenders in order to raise quick cash.