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Representative example: £500 borrowed for 90 days. Total amount repayable is £672.60. Interest charged is £172.60, interest rate 140.0% (variable).
While looking for a loan online, you may have come across the term ‘logbook loans’ and probably wondered what it meant. As the name suggests, these are loans whereby the lender uses your car logbook as collateral or security to give you the money. However, it doesn’t mean that the lender takes your vehicle; you can continue using it as long as you repay the loan as necessary. If you’re unable to pay, that’s when the lender repossesses your car and sells it to recover their money.
One notable advantage of logbook loans is that there isn’t any credit check. That means even if you have a poor credit history, you can still apply for this type of loan and solve your needs. This is especially beneficial if you have faced a financial emergency of any kind, and you know you can’t get a loan from banks and other financial institutions. The first obvious requirement to get a logbook loan is a car. Most lenders prefer cars that are less than 10 years old, but others can consider your loan request even if you have an older one. However, it should be in excellent condition and worthy despite its age.
All the legal documents concerning your car: Your vehicles V5 logbook, MOT, tax documents, driving license, and proof of insuranceUK residenceAt least 18 years of ageA regular income. Even if you’re self-employed, you’re encouraged to apply, but you must provide invoices and payslips. Since there is no credit check, your income is used to assess your ability to repay the loan.
Loan applications have become easier these days due to technological advancements. Since most lenders have websites, you can now apply at the comfort of your home or office. You just need to locate the logbook loan on the lender’s site, click on apply, and fill in the application form. However, the application stays pending until the lender inspects your car. They’ll ask you to take your car to their offices where they’ll check its condition and other legal documents. If your vehicle and its documents are 100% okay, then you’ll be asked to sign a Bill of Sale (for Northern Ireland, England, or Wales residents).
A Bill of Sale is a document that will transfer the ownership of your car to the lender. They become the legal owner, and if you’re not able to repay the loan as agreed, they can sell it without having to get a court order.
The average amount you can get is £500 to £50,000. The exact amount depends on the vehicle’s value. Some lenders put the maximum amount at 50% of your car’s value, but others can go even higher, sometimes as high as 70%. For people who are asking how long it takes to get the money after the loan request is approved, it can even take a day. The lender can either issue you a check or transfer the funds to your bank account.
Hopefully, you now have an idea about logbook loans and how they work. If you need money urgently but have a poor credit score, consider these loans, and solve your financial needs.