Other than serving as a reliable mode of transportation, your car is one investment that may actually save the day when financial emergencies come your way. Provided that your vehicle is less than ten years old and is free of any financing, you can turn your vehicle into cash in 24 hours or less. How do you do it? By taking out a logbook loan.
What are logbook loans?
Widely popular in the UK, logbook loans are personal loans secured against your vehicle. You can borrow anywhere from £500 to £50,000 payable in 12 to 36 months at an average representative APR of 400%. To know more about this, read at SimpleLogbookLoan.
At first glance, logbook loans are quick cash at a price. Considering the high interest rate, it is a costly loan option that in any case can help you patch a wide range of financial problems. From overdue bills to medical expenses and major investments, logbook loans allow you to borrow up to 70% of your car’s official trade value.
How it Works?
As the name suggests, logbook loans require your car to serve as collateral. This doesn’t mean you have to hand over your car to your lender. All they need is your V5 document along with other requirements such as MOT certificate, insurance details, proof of income and proof of identification among other things. In essence, it’s like handing over temporary ownership to your lender only that you still get to keep and use your car.
But there’s a downside. Like with any other types of secured loans, logbook loans come with high risks. We’ve already talked about the high cost but that’s usually expected with quick cash loans. The other type of risks you need to carefully consider is the risk of vehicle repossession.
Since the loan is secured against your vehicle, your lender through the “bill of sale” has the right to repossess your car when they deem appropriate. By appropriate, it means you haven’t paid your monthly dues for several months. Your lender tried to contact you but to no avail. Even the debt collector was ignored. After several attempts and they still get no response from you, the lender, at this point, can opt for repossession to cover for your outstanding balance.
Who is it for?
Despite the cost and risks, logbook loans continue to be a popular quick cash option for many car owners in the UK. You can’t really blame them considering the many advantages that come with the loan. For most people, the advantages of quick cash, no credit check and flexible terms far outweigh the disadvantages of high interest rate and repossession risk.
Logbook loans, in short, are ideal for people with bad credit. If you’ve ever been refused a personal loan because of your credit history, logbook loans offer you another alternative that is extremely easy to avail. Just make sure you know what you’re getting into to avoid any financial consequences in the end.