If you have bad credit and you’re looking to take out a personal loan, you’re in for one unpleasant surprise. It’s not going to be easy to get approved for a loan considering your poor credit history. You may be better off foregoing the loan than get rejected and leave a trail on your credit file that will only further hurt your credit score.
If you really need the money, however, this is a good time to look into logbook loans . Granted that you already checked out cheaper alternatives to no avail, taking out a logbook loan to meet a range of financial needs or emergency is a viable option.
What are logbook loans?
Logbook loans are a type of personal loan that is secured against your vehicle. To be eligible for this loan, you need to own your vehicle which should be free of any financing. You can borrow from £500 to £50,000 or up to 50% of your car’s official trade value.
When approved for a logbook loan, your lender requires you to provide the logbook or V5 document along with your car’s MOT certificate and insurance details. This is, in essence, handing temporary ownership of your car to your lender until the loan is paid off.
Why logbook loans?
Logbook loans are particularly attractive for people with bad credit. For one, logbook loans are easily accessible online. All you need to do is find a reliable lender. You can complete the application online, wait for approval and receive your money within 24 hours or less. If quick cash is what you need, logbook loan can definitely deliver.
Another advantage is the flexible loan amounts and terms. With unsecured loans, you are usually limited with small loan amounts. Logbook loans, on one hand, offer higher loan amounts since the loan is secured. Terms, in turn, are longer than most unsecured short term financing.
With logbook loans, there’s also no need to worry about credit checks. As long as you meet the requirements and you own your vehicle, you are welcome to apply and get approved for a logbook loan within the same day you applied.
When to take a logbook loan?
While certainly advantageous in many ways, logbook loans are not without its downsides. There are two common disadvantages consumers and experts call out logbook loans for.
One is the high interest rate. Because the loan is secured against your car, you might think that the interest rate will be lower. On that thought, you are completely mistaken. The truth is logbook loans are quite expensive. Lenders justify the high interest rate with the high risk they are taking on you. Remember logbook loans are made available for borrowers with bad credit. For most borrowers, the high interest is worth its promise of quick cash.
Another disadvantage is the risk of repossession. Since logbook loans are secured against your vehicle, you risk losing your car if you are unable to pay your monthly dues. Repossession is rarely the immediate course of action in the event of nonpayment. You will be contacted to make new payment arrangements. If you are still unable to keep up with your repayments, it is only then your lender will use the bill of sale agreement to repossess your car.
By weighing the advantages against the risks, this is how you can decide if going for a logbook loan is financially sound or not. If you think you can afford the monthly repayments and can handle the risks then by all means, go for it.