When you have a poor financial history, getting a personal loan may be more complicated than usual. Majority of providers in the UK, in fact, may immediately reject your application. Since you have a poor credit score, you are considered a high-risk borrower and creditors generally steer clear from such risks. This is where logbook loans come handy. If you need quick cash for a financial emergency, you are welcome to avail a logbook loan provided that you are a car owner. To know more about logbook loans, below is a smart guide about the financial product.
What is a logbook loan?
For borrowers with bad credit who cannot get a loan from major providers, logbook loans offer quick cash solution to a wide variety of personal emergencies. It is a financial product offered all over UK specifically for borrowers with bad credit issues. To avail the personal loan, the borrower must be a car owner. He or she needs to use said vehicle for collateral or security. With the security involved, there is less risk for the lenders hence the quick and easy loan approval. To know more about logbook loans and how it works, Money Advice Service has a comprehensive guide for you.
Who is it for?
As mentioned, logbook loans are specific for borrowers with bad credit problems. It is also only suitable for UK residents with a vehicle registered under their name. If you find yourself in a financial emergency and you know you have a poor credit score, you may be better off applying for a logbook loan instead of traditional loans from major providers. As long as you have a car to use as collateral, you can get your cash in as fast as within 24 to 48 hours.
What are the requirements?
The requirements for a logbook loan are pretty basic. Like with any other type of loan applications, the borrower must be of legal age and a UK resident. But more importantly, the borrower must be a car owner. The vehicle needs to be less than ten years in age. Most lenders will also require your vehicle to be free of any financing. Another non-negotiable requirement is proof of income. Whether you’re self-employed or a full time employee, you’ll need to show lenders you have the financial capacity to handle the monthly repayments.
How much can I borrow?
In general, logbook loan lenders offer amounts from £500 up to £50,000. The maximum amount you can borrow will depend on two major factors, which are your car’s official trade value and your income. If you need a larger amount of cash, you can borrow up to 70% of your car’s trade value. Approval will depend on whether your income can handle the monthly repayments.
What can I use the loan for?
Logbook loan lenders do not require borrowers to disclose the reason for the loan. So long as you’re eligible and you have proof of steady income, you can borrow your desired amount and use it any way you can. In most cases, borrowers use the loan for a variety of financial needs including overdue bills, medical expenses, home renovation, car repair, travel and many more.
How much does a logbook loan cost?
With no credit checks necessary, logbook loans are one of the easiest ways to find short term financing especially for borrowers with bad credit. But there’s a hitch. Because lenders are taking high risks, the cost of the loan is also significantly more expensive than traditional personal loans. The average representative APR for the loan, for instance, is set at 400%. The cost already includes all related charges, fees and interest rate associated with the loan on an annual basis.