When considering loan options you will be aware that there are various choices available. Sometimes, it can be tricky to decide between the deals on offer and make a decision which is right for you. A financial advisor or other such individual can, in most cases, provide some guidance but ultimately the choice is yours.
This article will provide an overview of some of the general benefits of logbook loans and also the features of these types of loans.
Primarily, these loans are selected by those people who are unable to access credit at the ‘regular’ sources. Very often, this means people who have a history of bad credit and debts, CCJs and other issues. Regular sources of credit would be banks or other financial institutions that offer loans to people.
The reason behind these loans being popular with people with bad credit is down to the fact that there is no credit check carried out with these loans. Typically, regular lenders will run a credit record check on someone to work out how risky they are to lend to. People with a great credit rating will have no problem at all getting most types of loans but those with a poor credit score could be denied a loan.
For those people with bad credit a few different types of lenders have stepped in to service them. These would include payday loans and logbook loans. These loans differ a little in the way that they provide credit, in that a logbook loan company will use your vehicle to provide you with a loan.
This practice is based on the ‘bill of sale’ act and means that the person getting the logbook loan will provide their V5c document to the lender for the duration of the loan. The lender will then provide a loan based on the value of the vehicle to the individual.
You will notice when researching these loans the APR charged is significantly higher than regular bank loans. This is due to the fact that these loans are issued to those with a bad credit rating. These individuals are therefore deemed high-risk to lend to as they most likely are unable to get loans in other places. The lenders are therefore lenders of the last resort.
In the vast majority of cases, logbook loans are used by people who need a short term credit loan. Individuals will typically borrow cash for a few months for all manner of things – covering a debt payment, paying for some emergency repairs and so on. The loans can provide cash quickly without a complicated application process and this tends to favour those individuals who need money quickly.
The most popular way for people to apply for these loans is through the internet. Applications can be made in a few minutes by filling out a simple application form. The lender will then receive this information and give you a call-back to confirm some requirements and setup a date to view your vehicle and sort out the details of the loan.
In recent years logbook loans companies have come under increasing pressure from the government and consumer rights organizations to abide by clearer regulation. This year the CCTA introduced a ‘Voluntary Code of Practice’. The majority of respected lenders now abide by this code.
Remember when applying for logbook loans to take into account the criteria. The criteria doesn’t differ a great deal between lenders and it is usually required that you are over eighteen with a car clear of finance and a UK resident.