What are logbook loans?
Logbook loans are secured on your car. The lenders will own your car until you settle the loan in full. You are allowed to use your car while you are repaying the loan amount. Logbook loans can be applied for online and also on high streets.
Borrowers can expect to get between £500 and £50,000 against the security of their cars. This depends on the current market value of your vehicle. There are some lending firms that will only forward the amount up to half of your car’s market worth.
How do these loans work?
When you take out logbook loans, you will generally be handing over the logbook of your vehicle. This is the registration document of your car and it is also referred to as the V5 document. These documents actually prove that you are the registered owner of your vehicle, In case the vehicle belongs to some member of your family, it would still be honoured and you will have to hand over the ownership of that vehicle until the loan amount is fully repaid.
It has to be noted that logbook loans are used only in Northern Ireland, Wales and England. These types of loans are only accessible in Scotland via https://logbookcalculator.net/scotland.php. When people are offered loans in Scotland, they are likely to be involved in a hire purchase agreement or in a kind of conditional sale. Borrowers have to be cautious about what is involved in the loan and how it is going to work out.
With logbook loans, there is a form that has to be filled out separately and it is known as the `Bill of Sale’. The law in the United Kingdom recognises only a Bill of Sale when the lenders register it with the High Court. If the Bill of Sale is not registered, the lenders must get an approval by the High Court when they want to repossess your car. Borrowers can easily check if a Bill of Sale has been registered after making out a written request through application to the Royal Courts of Justice in London. A fee has to be paid for this Bill of Sale. This is over and above the signing of credit agreements. This indicates that the lenders are temporary owners of the vehicle mentioned in the logbook. The borrowers, however, can retain possession of the car and use it during the tenure of the loan.
Receiving the Loan Amount
Most lending firms are using electronic payment facilities for transferring the loan amount into the bank accounts of the borrowers. Few logbook loan firms even offer instant cash services but there could be charges involved, ranging up to four per cent of the loan amount for this facility. Many logbook loans may run up to a maximum of seventy eight weeks. The law in the United Kingdom allows borrowers to pay the sum of the loan earlier, if they want to.
With certain agreements, the borrowers may only repay interest charges until the last month of their loan agreement. During the last installment in the final month of the loan contract, the borrower is expected to repay the full amount outstanding against the loan amount that was borrowed originally. The borrowers have to ensure that they understand how the logbook loans operate and that they are cognizant of whether they would be able to afford repayment of the entire loan amount.
How much do the logbook loans cost?
On an average, the Annual Percentage Rates are 400% or more. This is not an inexpensive form of a credit arrangement. For example, a loan amount of £1,500 may involve an installment of £55 every week for a period of seventy eight weeks. This would involve a total repayment of £4,250 with an interest component of £2,750. So, the borrowers have to be prepared to pay an interest charge of £2,750 for borrowing a sum of £1,500.
If borrowers are unable to pay back their logbook loan amount, the lenders can utilise their right to call bailiffs to seize your car in case of default. The vehicle will then be sold to recover the amount of the loan and if the sale amount is less than the amount owed by you to the lender, you will be held liable to pay back the shortfall.
If your vehicle has any existing finance against it, you will still be able to secure a logbook loan for yourself. This would be approved only when the existing loan agreement is nearing its end and when the outstanding amount is a low one. The existing lender needs to give the borrower permission to secure further loans against the vehicle.
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