The best logbookloans, see how much you can borrow and why one loan type is better than all the others.
The best logbookloans, see how much you can borrow and why one loan type is better than all the others.
There are two main types of logbook loan, there is the fully online logbook loan where you apply online and get your money online and donít have to talk to anyone and there is the logbook loan where someone visits you at your home, they both have advantages and disadvantages which Iíll now talk you through.
With an online logbook loan your giving the lender your bank account number, bank name, payee name and sort code, this is so the money can be transferred into your bank account online, many people are surprised to find that online logbook lenders also want your debit card number, expiration date and CVC code from the back of the debit card, thatís so the lender can deduct the monthly repayments directly from your bank account.
With an online logbook loan, your get the money in your bank account within hours of your loan being approved, you enter the vehicle registration number and your cars make, model and age are looked up on the DVLAís system, your cars details are also looked up on an HPI database, this tells the lender if you have insurance, road tax, MOT certificate and whether there are any loans against your car already.
If you want a lender to visit you at home, the process starts the same, you enter your cars number plate into the online form, your cars details are looked up automatically online and like with the online application your presented with a quotation on screen, you can then choose to continue with the online application and take out the loan online or you can request a call back, this is when a loans advisor will phone you back on the telephone number you enter, or you can request a meeting with a loan advisor where the advisor will visit you at home and discuss your application.
With an online application the lender must be able to query your insurance details, MOT and car registration details online, in much the same way that when you go to buy your tax disc online, sometimes the system will not let you proceed because it canít find your details and then you have to go to a post office to get your new tax disc.
Just like the tax disc renewal, if you canít renew online itís probably because you have just changed or renewed your insurance and the DVLA and HPI database hasnít been updated yet, either way youíre have to speak to a loan advisor on the phone or arrange to meet with a loan advisor if the online form wonít proceed.
The other advantage of having a loan advisor visit you at home is if you need the money in cash, sometimes you donít want to borrow a lot of money, but you need the money quickly and in cash, not through your bank account, when the loan advisor visits you at home they will bring the cash with them, they can pay you in pound notes or for a larger loan they can write you a cheque.
The other advantage of a home visit is that you can ask the advisor any questions you might have about your application, you are still under no obligation whatsoever to take the loan out, just because they visited you at home does not mean you have to say yes, you can say you need to think about it, or the loan offer is not as good as you thought.
On a home visit the lender can physically see your insurance cover note, MOT certificate and road tax, handy if the online application form cannot find your details, your also be able to show the advisor your V5C document, this is the registered keepers document after which the logbook loan is named, long before the DVLA changed the name of the V5C form it was called a logbook and indeed the general public still refer to a V5C form as a logbook.
Some logbook lenders will want to visit you and take your V5C certificate of vehicle registration away with them, they will then keep the V5C until the loan is paid off, there is no real reason for the advisor to hang onto the form, if you have a loan out against your car then you are under obligation to make the loan repayments, but some lenders still insist on it, there is no harm in it as you donít need the V5C for anything other than selling your car and you canít sell your car if you have a loan against it, when it is time for the road tax renewal, the DVLA will send you a reminder notice through the post and you use the number on this reminder notice to buy your six month or twelve month road tax online.
If you take a loan out form a lender who visits you at home, then youíre probably be making weekly repayments, if you take the loan out online then youíre probably making monthly repayments, a loan advisor can visit you at home or at a location that suits you, you might want the advisor to visit you at your office or other place of work or even the local coffee shop, some borrowers will not want the lender to visit them at home for fear of family or other householders hearing the loan discussions.
You can compare logbook loans between different companies by looking at the APR rate of the loan, the lowest APR means the cheapest loan as APR is the interest that you must pay on the loan and is a percentage of the loan amount.
There are no hidden fees with logbook loans, lenders make their money by charging an interest rate, so each week or month you make the loan repayment, the repayment amount pays off a portion of the money that you have been given and also a portion of this money is for paying the interest.
You can choose how long you want the loan for with typical loan lengths being from 3 months to 36 months or even longer up to a maximum of 7 years, depending on each individual lenders requirements.
A logbook loan is regarded as alternative finance because it is a loan from a loan company rather than from a bank or building society, people like logbook loans because it is a secured loan, meaning the money is being lent against your car rather than being lent against you personally, so if you have a poor, bad or terrible credit rating youíre more likely to get a logbook loan.
You can think of a logbook loan as a guarantor loan, you could go to the bank or your building society and ask for a personal loan, if you have bad credit the bank may still consider lending to you if you have a guarantor for the loan, this means if you can find someone to agree to pay the loan off if you are unable to make the monthly repayments yourself, usually your parents will offer to help if they have the money, but if your parents can lend you the money without the use of a bank then your save yourself money as you wonít have to pay interest to a bank, but in most cases your parents wonít be financially well off enough to help you with the loan repayments.
Your car is like a guaranteed personal loan, your car acts as the guarantor just like your parents could be the guarantor on your personal loan, if you fail to pay a personal loan back your parents as guarantors must make the monthly loan repayments and if you take out a logbook loan using your car as guarantor then if you canít make the monthly repayments your car will be sold by the lender to recover the money that the lender has given you.
Your need to be the registered owner of your car to get a logbook loan, that means it must be your name and your address that appear on the V5C vehicle registration form, if it isnít because for example a family member gave you the car and the car is still in their name then your need to complete the V5C change in registered keeper form and send that in to the DVLA before you can take out a logbook loan.
If you have failed to pay a utility bill (gas, electricity, water, Sky television, mobile phone) etc. on time or have had a loan like a personal loan for the bank or a Hire Purchase agreement on household appliances like a washing machine, fridge or dishwasher and failed to make the monthly repayments or had store cards that you paid back late or not at all, or any situation where you owed money and paid it back late or not at all, then those events will be recorded by the credit reference agencies and contribute to giving you a bad credit record, the worse your credit score the more utility it is that any lender will want to give you a loan, because they think if you have failed to pay back a loan before then you might very well fail to pay back their loan if they give you one, this means that with bad debt against you itís nearly impossible to be given a loan.
Logbook loans are different, it is not you who are taking the loan out, but your car, the loan is against your car and not you, if you take out a logbook loan and a lender looks at your credit history they will find no reference to the logbook loan on your personal credit file, if however, they run an HPI check on your car then the loan against your car will be found here.
If you already have a loan on your car, because for example you purchased your car in credit and are paying so much back each month until the car loan is paid off then your only be able to get a logbook loan for the value of the car you actually own, so if for example your car is worth £10,000 and youíre have paid half the loan off then your be able to get a logbook loan against the £5,000 of the cars value that you have paid off.
Whether you take out an online logbook loan or arrange for the lender to visit you personally at home, you will need to ensure that your car is in roadworthy condition, logbook lenders require a car to have insurance, road tax and a valid MOT certificate if the car is more than three years old, to be considered roadworthy, additionally your car must not be recorded as written off by an insurance company when an HPI check is performed.
If you have declared SORN and have your vehicle, off the road at home on your drive or in a garage, then you must get your car re-registered with valid insurance, road tax and MOT before youíre be given a logbook loan.
Itís not only cars that you can use to get money from but your motorbike or van too, as long as you are the registered keeper of the vehicle and your vehicle is all or mostly clear of finance then youíre be able to get a logbook loan, if you have a company car then only the company can take out a logbook loan on your car and not you as you are not the legal owner of your company car.
If you have a bad credit rating, have been declared bankrupt, are unemployed or any other situation that you think might prevent you from getting a logbook loan, then your be right, these things are taken into account, but the only way to know for sure is by applying for a logbook loan and seeing if you are accepted, logbook loan application are not recorded against your credit file (personal and unsecured loans are) so its fine to apply for a logbook loan to see if you would be accepted.