A sneak peek into how logbook loans work

You probably have heard about the benefit of taking a logbook loan and wondered how exactly it works. If you have never taken a logbook loan before, you might be keen on understanding what it entails so that you make an informed decision. Essentially, a logbook loan is the kind of loan where your car is used as collateral. Unlike a car loan where you actually get a loan from a high street bank or financial lender to buy a car, this is different because you use the car you own to act as security for a specified amount of money you wish to be advanced. Ordinarily, what we are trying to say is that you cannot apply for a logbook loan if you don’t own a car.

How does it work?

For starters, you need to make up your mind that you need a logbook loan. When this happens, there are two options at your disposal. One is to make an application from a brick and mortar business and the other is to make an application online. Online application is not only fast and simple but also convenient as it gives you the opportunity to apply for a loan from wherever you are provided that you have an internet connection.

Your provider will determine the amount of money you are allowed to borrow based on the details of the car you provide such as car registration, make of the car as well as the number of years it has been on the road. Ordinarily, most UK logbook loan providers require that the car you use as security should not have been on the road for more than 10 years or have some form of financing attached to it. After everything has been ascertained and your car can be used as collateral for a loan, the next course of action is to sign a bill of sale agreement.

A bill of sale agreement document once signed temporarily makes your logbook loan provider as the owner of your car for the period of the loan. This agreement gives the provider of the loan security in the sense that should you default on your loan, then your car is the fallback plan. They can always repossess your car, sell it and recoup the loan they advanced to you. However, should the car go at a price that is lower than the amount you applied for together with interest, the logbook loan provider can always sue you so that you can pay up the difference. In simple terms, with a bill of sale document signed, your provider does not need a court order so as to repossess your car in the event you fall back in repayments for a couple of months.

Requirements

To qualify for a logbook loan, the requirements are very simple. You must have a V5 document that shows you legally own the car, you must be an adult of 18 years of age as well as a citizen of the UK. Additionally, you need to provide proof of address, proof that you are employed, bank statements as well as ministry of transport certificate. Once this has been provided, most logbook loan providers will approve your loan within the shortest time possible usually within 24 hours.