If you have bad credit and you’re hoping to borrow a large sum of money, unsecured loans may not meet your needs anymore. It’s a good thing there are logbook loans. Logbook loans, essentially, are secured loans which means they requires a security or collateral. As you can glean from the loan’s name, logbook loans require you to be a vehicle owner to be eligible for the loan.
Here are things you should know regarding logbook loans if you’re planning to apply for one:
Requirements of a logbook loan
To be able to avail a logbook loan, you must meet the basic requirements, which includes the customer being at least 18 years of age, residing in the UK and owns a vehicle. The vehicle should be free of any financing and it will be used as collateral for the loan. For speedier processing, customers are recommended to prepare a number of documents which include V5 document, Ministry of transport certificate as well as a copy of identity card. In addition to this, your logbook loan lender will require that you provide proof that you receive income monthly, proof of address as well as tax and insurance details.
How much can you borrow with a logbook loan?
With your car as security, you can borrow more money with a logbook loan as opposed to what unsecured loans can offer. Most lenders offer loans from £500 up to £50,000, which you can use for any purpose you have in mind. With the larger loan offers, it makes logbook loans ideal especially for major financial emergencies like medical expenses and major investments like down payment for a new car or home renovation.
How long are the repayment terms?
With the larger loan offers, it follows that repayment terms are also longer. You can choose to repay the loan bi-weekly or monthly over the course of a year up to 3 years. This makes the loan terms more flexible. If you want your monthly repayment dues to be cheaper, for example, you can borrow a small amount and pay for it for three years. Just keep in mind that interest rates become more expensive over a long period of time.
How much do logbook loans cost?
When it comes to processing, you can’t complain with how fast logbook loans UK applications are processed. But you might say different when it comes to the cost. Because logbook loans are specifically offered for people with bad credit problems, the interest rates are also higher. The representative APR for logbook loans are quite high at 400% or more on average. If you’re going to take out a logbook loan, it is best to plan your borrowing carefully considering the high cost involved and the even higher risk of vehicle repossession.