The idea of a loan offer which does not rely on your credit score is attractive and even seductive to many individuals who have poor credit. A logbook loan is a loan offer type found in the UK where borrowers with bad credit history can have access to V5 loans by simply submitting their vehicle logbook or registration papers (known as V5 after 2005) to the lender as collateral until as such time as they pay back the loan in full. Logbook loans are increasingly popular for this reason and also for the fact that the process involved is quick (with borrowers walking away with cash in hand in less than 24 hours) and relatively stress free as compared with other loan options. However, before applying for a logbook loan, there are certain considerations a borrower needs to make.
Why do you need to borrow?
Borrowing money should be a last-ditch attempt all the time. If you do not absolutely need to borrow money, then you should look for another option, like get a job or start a business to get money. However, logbook loans are a great option for people looking to borrow money for a variety of reasons. The lender is never interested in your reasons for borrowing the money and whether it is a medical emergency, a new baby, holiday money or startup funding, a logbook loan is usually a genuine lifesaver. It is however important to be sure of why you need the money because a logbook loan can have high interests.
What is the value of your vehicle?
Your logbook loan is borrowed against the value of your vehicle and while the ceiling is set with the value of your vehicle, your borrowing cap/limit does not have to be at the ceiling. For example, if you own a vehicle worth £9000, your logbook loan ceiling could be set at £8900 but you may not want to borrow up to that amount – Logbooklender.co.uk are know to give loans up to 70% of the vehicles value. You may want to borrow only £600. At this point, you should ask yourself if you really want to set the value of your vehicle for such a small sum. Avoid the temptation to borrow at your vehicle’s value ceiling (as we have stated in the first point), as you will only be borrowing extra cash you do not need.
Can you afford to pay off the loan?
This will require you to consider your income. How much you make is a determinant of how much you can take out in a logbook loan. If you have a well-paying stable income, then a logbook loan will be easily paid off by you. With many logbook loans, you can modify the terms of repayment depending on what you can afford per time.
You should also have a minimum time in which you want to repay your entire loan. This will help you plan how much you intent to spend on monthly repayments. Understand that while logbook loans are adjustable for long term or short term, they are meant for short term lending and the longer you extend your repayments, the more you are likely to pay with accumulated interests.