Ever wondered what you would do if you were in need of urgent cash but can’t immediately avail a loan because you have bad credit? In a world where your credit score is the difference between getting approved for a loan and getting denied for the same, you will be forgiven for being wondrously worried. For long, those with a poor credit score found themselves in unfamiliar grounds whenever they sought to apply for a loan. A simple credit check and they would get the “we are sorry but we cannot approve your application at this time”. This continued to be a source of immense stress until logbook loans became a reality.
Well, from the very sound of the name, logbook loans are a special kind of loans where a person’s car is used as collateral to secure a specific amount of money usually up to 70% of a cars official trade value. A person with bad credit can apply and get approved for a logbook loan within hours without having to worry about credit checks.
How a logbook loan works
The first thing that you need to do is identify a logbook loan lender you wish to borrow money from. Once you’ve done that, provide a cars registration number so that your logbook lender can evaluate it and ascertain whether it is fit to be used as collateral. Once the condition and the value of the car has been ascertained, you are eligible to apply for a logbook loan up to 50% or 70% of your car depending on the UK logbook loan lender you are doing business with. Of course, you should always go for a lender with an affordable annual percentage rate to ensure that you do not end up repaying an exorbitant loan amount. The next thing is to hand over your car logbook and sign a bill of sale agreement which essentially makes the lender the temporal owner of your car until such a time when you have fully repaid the logbook loan you took.
What documents are required before you can be approved for a logbook loan?
When you express your interest to apply for a simplelogbookloan, your UK logbook loan lender will require a number of documents from you. The number one document is of course your car logbook document which provides proof that you are the legal owner of the vehicle you are setting up as collateral. The other document is a Ministry of Transport (MOT) certificate that proves your car has been inspected and has been found to be in good condition. You should also provide an identification card as proof of identity, bank statements to show you receive a regular income as well as utility bills to show proof of address.
What are the risks of applying for logbook loans?
While there are many benefits that come with applying for a logbook loan, it’s instructive to note that there are also a number of risks involved with applying for the same. For one, it is imperative to note that failure to make repayments as agreed might lead to car repossession. Secondly, logbook loans are known to have high interest rates which at times could lead a person paying more than twice the principal amount.