Over the past few years a lot of new forms of lending have come to the fore. Borrowing money from the banks and traditional lenders has become a lot more difficult thanks to the financial crisis and the recession. However, this has paved the way for other forms of lending to shine. One of these options is a log book loan. This is a method of lending that is generating more and more attention in the current day. But, what is it? And, will you be eligible for one? Continue reading to discover all you need to know…
WHAT IS A LOG BOOK LOAN?
First thing is first, what actually is this type of loan? Well, a log book loan is a short term loan that is secured against your vehicle. Thus, you will be able to borrow up to a certain percentage of what your car is currently worth – this is usually 70 per cent. The lender will use the Glass’s Guide to determine the valuation of your vehicle, so you may want to get that windshield repair prior to the valuation. You are free to use this money as you wish. Unlike some loans, there are no stipulations regarding how it should be spent.
HOW DOES A LOG BOOK LOAN WORK?
You will be pleased to know that you do not have to hand over your vehicle when taking out a log book loan. In fact, the only thing you will have to hand over is your V5 logbook – hence the name. In essence you are signing a bill of sale, which states that the lender can keep your vehicle if you are unable to repay the loan in accordance with the terms and conditions you have agreed upon in the contract.
This bill of sale, which is registered with the High Court, means the lender is given temporary ownership of your car. They will technically own your vehicle until you have made the repayments. Nonetheless, as stated, you will have full access to your vehicle as long as you keep up with your payments.
ARE YOU ELIGIBLE FOR A LOG BOOK LOAN?
Like any lending option, log book loans come with their own set of criteria regarding eligibility. You will need to be 18 years of age or older. In addition to this, you need to prove that the vehicle is yours and that it has been paid for in full. The car must also be taxed, insured, and MOTed. You will also need to provide proof of income, such as paystubs. This shows the lender that you have the capability to make the repayments. This is what will generally be required of you. Nonetheless, every lender differs and thus they may ask for additional information or extra documents as well.
Hopefully you now know all you need to in regards to a car log book loan. This is an option many people are turning to when they need to borrow money in the present day. If this sounds like a good option to you, make sure you asses your options carefully to find the best lender. And don’t forget to read every single word of the contract before signing the dotted line!
Photo Credit: Mercedes-Benz