As the name of this loan implies, a Logbook Loan is a loan that is based on the information available on the logbook of a vehicle. Therefore, it is a loan that can be availed only if you have a vehicle. This loan is offered to borrowers who have even defaulted in repayment of their other loans. The main security for the lender is the vehicle mortgaged by the borrower.
Whatever the purpose be, the borrower can raise money in an emergency, against his vehicle, be it a car, a truck or a van. As the important component in the eligibility for this logbook loan is the logbook of the vehicle, let us examine what this logbook is all about.
The log book is a government approved file that contains vital information about your vehicle such as the make, model, colour and chassis number, and the name, address of the keeper of the vehicle. The logbook is very important for the vehicle owner, especially in case anything goes wrong. It serves as evidence and is a valuable asset. This makes him eligible to avail the secured loans against his vehicle.
Logbook Loans are an easy way to pledge the vehicle and obtain loans. The vehicle must be owned by the person applying for this loan. There should be no other loans on the vehicle and even there is one, it should be in an almost-paid status. Otherwise, the loan is not granted.
Logbook Loans come in handy when a person who has defaulted in repayments, has been refused loans by other lenders such as banks. The interest charged is somewhat higher than banks and other institutions owing to the higher risk in this type of loan. The reason being is that, the vehicle which is mortgaged is under use and constantly suffers wear and tear, its value keeps depreciating over a period of time. It is not like gold or silver that is a secure tradable commodity in the bullion market.
Logbook Loans are advanced for shorter periods of say up to four years or so. The vehicle should also not be older than say seven to eight years. The newer the vehicle, the higher is its evaluated value and hence more is the loan amount sanctioned. The vehicle must be also well-maintained and in a good condition, since the owner is pledging it to the lender to get the loan. Some of the conditions that make one eligible to get this loan are that the owner must:
- Be over 18 years of age (some lenders require you to be over 21)
- Be the legal owner of the car or other vehicle
- Have fully paid for your car or almost paid for it
- Be a UK resident
Provide all relevant documents when you visit your local branch.