Logbook loans – the key things you need to know
The idea of a perfect credit score is not a luxury that most of us can afford. Due to one reason or the other and owing to the fact we are not equal when it comes to financial might, getting access to credit facilities can at times prove a tad difficult. No doubt, lenders in the contemporary society insist on a good credit score before one can be considered for a loan. In as much as this has been a thorn in the flesh for those with a poor credit rating, the introduction and subsequent popularity of logbook loans has indeed given UK individuals with a poor credit rating a new lease of life.
Simply put, with logbook loans, one’s credit rating does not play any role in the decision to get approved or rejected for a loan. So long as you legally own a car and are willing to transfer ownership of the same to the lender for the duration of the loan, you can get access to an affordable logbook loan without having to worry about the state of your credit rating. That said, what are the eligibility requirements for a logbook loan?
Before you apply for a logbook loan, there are a number of requirements you need to meet. First and foremost, you need to be a citizen of the UK. You must be residing within the UK and be over the age of 18 years. This is very important as you cannot enter into contractual agreements under the UK laws unless you are an adult of 18 years. You also need to be the legal owner of the car you intend to set up as collateral. In other words, you can’t use a friends, colleagues, spouses or siblings car and use it as collateral for your logbook loan.
In addition to the aforementioned basic requirements, there are also other things you have to observe. For instance, the car you set up as collateral need not to have been on the road for more than a decade. It needs to have comprehensive insurance and be in good condition. Another condition that most logbook loan lenders insist on is that the car should be free of any financial attachment. However, if yours has finance attached to it, you need not worry as there are a number of logbook loan options that allow financing especially if the finance attached to the car is not that substantial.
As regards transfer of ownership, the lender will hold onto your car logbook but you still get to use your car while repaying the loan. Of course, the benefits of logbook loans are the reason they have become quite popular over the years. The idea of no credit checks, ability to rebuild credit report and get access to a loan even though one has a history of arrears is one of the reasons its popularity is not about to wane soon. However, the downside to logbook loans is the aspect of high interest rates not to mention the risk of car repossession should the borrower be unable to service the loan.