You may have heard ‘logbook loans’ mentioned in the last few years, perhaps through TV adverts or online. A logbook loan is a short term financial solution which allows you to borrow money and use your car as collateral (the same way you could use your home to get a secured loan).
In order to qualify for a logbook loan, there are certain conditions that you must meet:
- Your car must be registered in your name, and yours alone. This stops people from using cars that are not legally theirs in order to secure loans. You will also need to supply your logbook (V5) when you apply for the loan.
- Your car must be insured, or have a valid cover note that will need to be shown when applying for the loan.
- You are likely to need some form of photo ID (your driving licence would be acceptable), and a recent utility bill to prove your current address.
- You must be over 18 and must be a UK resident in order to get a logbook loan.
- You need to own your car outright in order to be given a loan. The loan company will assess the value of your car and give you anything up to that amount, so if you are still repaying a loan or payment plan for your car you won’t be eligible.
Working and being paid regularly is helpful if you are thinking of getting a logbook loan, as the lender will consider your ability to repay the loan when you apply. They will take into your account you monthly incomings and any outgoings that you may have, such as mortgage payments, loans, and so on.
Many people choose to take out logbook loans because a credit check is generally not required – the very fact that you own your own vehicle is usually good enough. Another benefit of these logbook loans is the speed with which the money can be provided (sometimes as quickly as fifteen minutes after your application has been approved!), and many people find this useful in a financial emergency. Loans do charge a higher rate of interest (usually around 20%), so are generally used as a short-term solution.