Who can Apply for a Logbook Loan?

10 February 2010 - Which Way to Pay

    



Who can Apply for a Logbook Loan?

 

 

 

The loan market is peppered with interesting ways to borrow – and even when it seems as if lenders are cracking down and becoming tougher than ever, you can always find one who will take you on.  Logbook loans provide a very simple way to borrow – but who are they for?

 

Logbook loans are not as big in the UK as they are in other countries, but they are quietly providing borrowers with an easy way to access credit. 

 

They are classed as secured loans because the borrower uses his or her vehicle to guarantee the loan.  So, based on the value of their car (or other vehicle) they can borrow up to around £50,000. 

 

The criteria set out by logbook lenders are pretty easy to cover:

 

-          Must be at least 18 years old

-          Must be legal owner of the vehicle

-          Vehicle must be no older than 8 years

-          Might need regular income

 

Credit checks are not a factor – logbook lenders know that they can claim your car if you cannot repay the car, so they don’t carry out credit checks on customers.

 

Not surprisingly, the ease of getting a logbook loan and the lack of needing to have a perfect credit score means that this loan type is aimed mainly at low credit borrowers.  People who have been refused elsewhere or have arrears/CCJs against their name – they can all be confident of being accepted.

 

But there are some drawbacks: for one, the interest rates are usually very high – meaning you could be paying back much more than you borrowed in the first place.  In addition, if you can’t meet your loan repayments you risk losing your car!  All in all, logbook loans are a pretty risky way to borrow money – not only could you lose a precious possession but your credit rating could receive further damage.

 

Before jumping in and taking a loan, it is worth thinking ahead – will you be able to make the repayments?  You might like the idea of the cash now, but down the line you will need to be paying it back.

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