If you have trouble securing a loan due to a poor credit history but you have a car, then Logbook Loans UK may have a solution for you. These loans work by securing the money you borrow against the value of your vehicle but the main thing to remember is that if you don’t pay back the loan, you could lose your vehicle.
How a loan works
Logbook Loans tend not to be the cheapest way to borrow money but if you have a poor credit rating or a low income, it may be an option for you. Always check other sources of credit first as if something goes wrong, you could lose your vehicle. Check out, for example, how to borrow money for those with bad credit.
If you decide this is the option for you, then you need to check your vehicle can qualify for a loan. The amount you can borrow is based on the value of the vehicle so you need to assess how much this is. Many of the lender will lend around 50% of the value of the vehicle as assessed by them as long as you don’t have any outstanding credit on it.
The type and age of the vehicle will also have an impact on how much you can borrow as these factors have an effect on the value.
Picking a loan
Once you have an idea about how much you can borrow, the most important factor in deciding which loan is for you is the interest rate. Every loan will display an APR, which is a figure that tells you how much interest you would pay on the money you borrow.
Secondly, to the interest, consider which loan gives you the cheapest and quickest access to the money you need. There are some companies that will provide a same day loan but these are rarer in this market than others are because the lender needs time to assess the value of your vehicle. Some lenders send a representative to your house to inspect the car so a logbook loan is not always the quickest method of getting cash.
Financial Implications
While hopefully you take a loan, everything goes to plan and you pay it off as agreed, it is vital that you always understand the consequences if something goes wrong. Every lender will give you the specifics of their loan before you commit to it but here are some general pointers.
Firstly, always make your payments on time and in full. If you don’t, there is a possibility that the lender can repossess your vehicle to sell it against the loan balance. And should this happen, you could still be liable for money if the selling of the car doesn’t clear the balance you have with them. Understand from the outset what your lender’s policies and approaches are if there is a non-payment so you are aware.
The best practise is always if you think for some reason you cannot make the payment when due, contact your lender ahead of time to discuss with them. They may be able to make a suggestion or put a short arrangement into place to help with the situation. Also check what charges will be applied to the account for the non-payment.
If a payment is missed, most lenders will get in touch by phone, email or by post to organise when you can make the payment. If you repeatedly miss payments, this is when collection practises may come into force or they may seek legal action.
Remember that if you don’t pay a payment on time, this can have a negative effect on your credit score. The most often you don’t pay a payment on time, the worse your credit rating will be and this can have a long-term effect on your borrowing of all types.
If you feel your debt problem is getting out of hand, you can visit the website moneyadviceservice.org.uk or speak to StepChange Debt Charity on 0800 138 1111. You can also contact the Citizens Advice Bureau and the National Debtline for help.
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