Logbook loans are becoming a more popular form of borrowing money than ever before. They are effectively a form of secured loan, with the value of the loan secured against the value of your car, and they enable borrowers to borrow a few hundred pounds up to tens of thousands of pounds. The borrower retains possession of the car but the logbook is given to the lender until the terms of the loan are met and the repayments are made.
A secured loan gives the lender greater security over the money that they lend to borrowers. While in many cases, this implies that the loan is secured against the value of a house, it can effectively be secured against virtually any item of value and the car is often the second most valuable item a person owns that includes ownership deeds; in this case, the logbook.
There are certain stipulations that must be met to enjoy access to logbook loans. Primarily, the logbook must be in the name of the borrower and not in somebody else’s name. This ensures that people cannot use the log book belonging to another person’s car, take out and default on the loan, and the unwitting car owner lose possession of their car.
Some companies may also place a stipulation on the age of the car with many companies only offering loans to those car owners whose vehicles are under 8 or possibly 10 years old. This is because the value of a car quickly depreciates when it reaches this age and the car itself may become worthless if it fails an MOT or suffers any major damage or breakdown.
One of the greatest benefit of logbook loans is that they do not typically require a credit check so people with any credit history, whether it’s good or non-existent, are able to borrow a reasonable sum of money without even having to worry about the indignity of a failed credit check. A regular income ensures you can make the agreed repayments and the logbook of your car means that the loan is secured against a tangible asset.
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