Smart Guide to Logbook Loans

There are various reasons why people resort to borrowing money in order to patch financial needs and problems. Some borrow money to pay overdue bills while others do it for car repair or a medical emergency. Still others turn to personal loans for major investments such as home renovation, car purchase or business expansion. Some also borrow for major expenses like a wedding, a vacation or for education.

Whatever your purpose for borrowing money, knowing what you’re getting into is critical if you want the best deals and if you want to avoid grave financial consequences. If you’re car owner and you’re planning to use your vehicle as security or collateral for a logbook loan, for instance, you need to take your time understanding the product prior to finalizing your application.
Below are smart guidelines that you should find helpful when investigating logbook loans:

What is a logbook loan?

A logbook loan is a type of personal loan that is secured against your car. In other words, you put your car as security in exchange for a loan amount ranging from £250 to £50,000. The loan term typically starts from 3 months up to 3 years.
With its flexible amounts and terms, borrowers can choose how much to borrow and for how long the loan will last. If you only need £250, for your bills, you can borrow just that and repay it within the shortest term possible. You can also apply for a £5,000 or £10,000 loan for any purpose you have in mind. But either way, the general rule is to borrow only what you need and what you can afford to avoid the high risks of losing your car.

What is the interest rate?

The average Representative APR (annual percentage rate) for logbook loans is 400%. With competition getting fiercer among lenders, however, some are already lowering their APR to 200% or lesser just to convince customers. Take for instance Eaffy Logbook Loans a popular logbook loan lender online for customers in the UK, which claims to offer the cheapest rates in the market.
if you borrow £850 over 18 months at a flat rate of 132% per annum (fixed) with a representative 450.5% APR you will make 17 monthly payments of £140.72 and 1 payment of £140.76, repaying £2,533.00 in total. However, we only charge interest monthly and we do not penalise you for early settlement. If you repaid the loan in one month it would cost you just £93.50 and nothing more.

How logbook loans work?

To qualify for a logbook loan, you just need to meet the basic requirements which generally includes being of legal age, a UK resident and a car owner. If you are eligible for a logbook loan, you can proceed to preparing the necessary documents such as your V5 or logbook document, the vehicle’s MOT certificate, insurance details and so on.
You can then apply logbook loans online and wait for approval within the same day. Once approved, you can expect to get the money within 24 hours or less.

What are the Risks?

When approved for a logbook loan, you lender will keep the V5 document of the vehicle. You, on one hand, get to keep and still use your car. However, there is a high risk involved here. Since the loan is secured against your car, you put it at risk of repossession in the event that you miss or delay with several repayments or if you do not make payments at all. To avoid repossession, commit to pay religiously, preferably before your due date to cover all bases.