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What are logbook loans?

Logbook loans are a way to borrow money without being assessed and possibly refused based only on a simple computer credit check. Instead the loan is secured against your car, which you can continue to use as long as you keep up with the repayments.

They are very useful for people who find it difficult to get credit elsewhere.

How do logbook loans work?

Once a logbook loan has been agreed the borrower hands over their vehicle’s logbook to the lender, who will keep possession of it for the duration of the loan contract.

Although the vehicle stays in your possession it is technically owned by the lender. If you default on payments and make no effort to repay the money your vehicle may be repossessed and sold.

Most providers offer same day loans and you will often receive the loan within hours of a successful application.

What are the Benefits?

Logbook loans provide a very direct means of borrowing money. Offering your vehicle as security avoids the need for drawn-out background checks and can mean the money is in your account within a matter of hours.

Logbook loans are also very flexible when it comes to repayment. You can choose to pay them off early or make occasional lump sum payments on top of your repayments to reduce your monthly commitment and total interest.

When can they be useful?

Logbook loans are ideal for people with short term cash flow problems, perhaps to tide them over a tricky period or to pay for something that is urgently needed.

Whether it is for unexpected medical bills, essential house repairs or just a much needed holiday, logbook loans provide a useful way for people to access the funds they need when they need them, often in the form of a same day loan.

This is especially true for those who are looking for loans with no credit check and who find it difficult to get credit through the usual high street lenders.

Am I eligible...?

Do I need to be employed to apply for a loan against my car?

Proving that you can afford the repayments is an essential part of the application process for logbook loans. You will have to show that you receive a regular income from either full or part-time employment. Most lenders also welcome applications from self-employed people who are able to provide payslips or invoices that prove their income.

Do I have to give a reason for the loan?

Logbook loans can be used for any purpose as long as it is legal. You do not have to give a reason for the loan and can spend the money as you wish.

What if I have CCJs or a bad credit rating?

With logbook loans it is the car that provides security. This means lenders can be more flexible than banks and other credit providers in deciding who they will lend money to. If you own the vehicle and can afford the repayments then a poor credit rating need not be a barrier to getting a loan.

Is it right for me...?

What if I already have finance on the car?

Logbook loans are not a suitable solution if you already have outstanding finance on your vehicle. A loan application under these circumstances is unlikely to be successful. If, however, the finance is close to being repaid in full it may be worth getting in touch with a logbook loans provider to discuss your options.

Are old cars accepted?

Cars generally have to be less than ten years old to be accepted as collateral for a loan. There are exceptions and some lenders do offer logbook loans for older cars that are in good condition or are still valuable despite their age, so it is worth enquiring whether yours will qualify. The value of the vehicle will determine the amount you can borrow.

How can I find the cheapest logbook loans available?

Direct lenders offer a wide range of deals and it is important to shop around to get the one that is best for you. Logbook loans APR in particular can vary enormously so be sure you know exactly what your repayments will be, how many repayments you will have to make and the total amount, with interest, that you will have paid at the end of it.

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Logbook Loans in the UK

Scotland

Bills of Sale are not legally binding in Scotland and so cannot be used as security. Logbook loans providers have to use alternative credit arrangements such as hire-purchase or conditional sale agreements, both of which offer the rights and protection of the Consumer Credit Act 1974.

England, Wales & Northern Ireland

Logbook loans taken out here are secured against a vehicle through a credit agreement and a Bill of Sale document. This gives the lender temporary ownership of your vehicle even though you continue to use it.

The Bill of Sale is only legally recognised if it has been registered with the High Court. Without this registration a court has to give its approval before a vehicle can be repossessed.

The Application Process

What is NEEDED for the application?

To apply for a logbook loan you will need to show you are the legal owner of the vehicle, have a bank account, earn a regular monthly income and can afford the repayments.

You will need to have your vehicle available for inspection. Some companies will also ask to keep possession of your spare key for the period of the loan.

If you have the right information available you will normally be able to get an instant loan decision.

What DOCUMENTS do you need?

During the application process you will need to have the following documents to hand:

  • The V5 logbook for your vehicle.
  • MOT, insurance and tax documents.
  • Photo ID such as a passport or driving license.
  • Proof of address in the form of a utility bill dated within the last three months.
  • Bank statements for the last two months.
  • If you are self-employed you will also need payslips or invoices for the last two months.

How LONG does it take from making an application to receiving a loan?

The majority of lenders offer fast, same day logbook loans which means the cash can be transferred into your bank account within hours of a successful application. You can apply for logbook loans online without needing to speak to anyone initially and the whole process can be very quick.

You generally won't be able to get a full online decision although you will be able to submit all your details and then finalise the loan over the phone or face to face with an advisor. Once you provide the required documents and sign the paperwork the money will be transferred to your account within minutes.

Receiving the loan

How much can you BORROW with a logbook loan?

Logbook loans usually allow you to borrow anything from £500 to £50,000, depending on the value of the vehicle. The maximum you can borrow will be a percentage of your vehicle’s value, typically 70 percent. The best logbook loans providers will also take into account how much you can reasonably afford to pay when deciding on the amount they are prepared to lend.

How you will RECEIVE THE LOAN

As with other short term loans your money is normally paid directly into your bank account shortly after you sign the logbook loan agreement. In many cases it will be in your account and cleared within 30 minutes, although some banks may take longer to process the payment.

What you should BE AWARE of when taking out a logbook loan

Borrowing money is a serious commitment, no matter how you do it. It is important to be aware of what can happen if you don’t meet your repayment obligations and then make no effort to settle the loan by other means.

  • If you fail to meet your loan repayment obligations your car will be at risk of repossession.
  • Your credit rating may be adversely affected.

Repayment

How to REPAY THE LOAN

Most logbook loans are repaid using a continuous payment authority via a debit card, direct debit or standing order arrangements. Payments are collected automatically on a monthly or weekly basis. Some providers send a text or email reminder two days before the payment is due. If the direct debit does not go through the payment can also be made by cash or with a cheque.

Are LOGBOOK LOAN INTEREST RATES fixed or will they change?

The interest on logbook loans should be a flat rate which is fixed at the time of taking out the loan. Reputable lenders will not offer anything less. The rate from these companies will not change during the lifetime of the loan, leaving you free to plan ahead and budget with confidence.

What are the REPAYMENT OPTIONS?

The repayment periods for logbook loans typically range from 12 to 36 months. If you want to reduce the period of the loan to save on interest you can make higher repayments at any time. You should not have to pay a penalty for doing this. In some cases it may also be possible to negotiate a loan in which you pay interest only until the final month, when you will have to settle the debt in full.

Can you make EARLY REPAYMENTS?

Logbook loans can be repaid in full at any time. With a reputable provider there should be no penalty, early settlement or exit fee to pay. It is also possible to make partial settlements which will reduce the total interest you pay as well as your instalments for the rest of your contract.

Are TOP UPS available on CURRENT logbook loans?

If you need additional funds you may be able to apply for a top-up loan. This will depend on whether you have kept up to date with your repayments for a reasonable length of time and become a trusted, reliable customer. You will need to show that you can afford the new repayments.

Cannot make REPAYMENTS?

Don’t despair. The important thing is to contact your logbook loans provider as soon as you realise you have a problem. If you are willing to find a way to repay the money they should be prepared to work with you to find a solution. Burying your head in the sand and hoping the problem will go away is never a good idea and can lead to extra interest and charges being added to your loan.

Will it affect your CREDIT SCORE?

Applications for logbook loans are not subjected to the same stringent credit checking process applied to conventional loans. Applying for and taking out a loan secured on your vehicle will have absolutely no effect on your credit rating, as long as you make your repayments on time. Failing to keep up with payments could lead to legal action which will affect your rating.

Who will KNOW you have taken out a loan?

The application process for logbook loans is strictly confidential. In the vast majority of cases your employer will not need to be contacted. If there are exceptional circumstances that require the lender to speak to your employer they must first get your permission to do so. A reputable logbook loans provider will also ensure that all your information is stored securely and will use advanced data encryption techniques to protect your privacy.

Are the providers of logbook loans REGULATED?

Providers of logbook loans should be licensed and regulated by the Financial Conduct Authority (FCA). They should also operate according to the strict code of practice laid down by the Consumer Credit Trade Association.

What are the ALTERNATIVES to logbook loans?

Credit unions can offer a solution for people on a low income who want to borrow a small amount of money. These loans are normally only made over a short period of time and you may be required to open a savings account with them before you can borrow. To find the cheapest loans that are available to you it is best to do some good research before signing up to anything.

What to do if you need HELP WITH DEBT?

If your debt problems are looking serious your best course of action is to get expert advice before committing yourself to options such as logbook loans. Free advice is available from organisations like Citizens Advice and StepChange Debt Charity to help people manage their debts and find ways out of their situation.

What to do if you have a COMPLAINT about a logbook loan provider?

The providers of logbook loans have an obligation to treat all their customers fairly and to lend money responsibly. If you have a complaint your first step should be to contact their customer service department who are there to provide advice and assistance. If you are still not satisfied you have a right to take your complaint to the Financial Ombudsman Service who will investigate the issue to see if you have a valid case.

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REPRESENTATIVE EXAMPLE:

Amount of Loan £1000.00. Repayable by 12 monthly repayments of £141.67 or 52 weekly repayments of £32.69
commencing 1 month from the date of the loan.

Total Amount Repayable £1700.04. Rate of Interest 70% per annum flat fixed. Representative 190.3% APR.