What is a logbook loan?

We are all well aware of mortgages; chances are you’ve got one or know someone who has. You secure the loan against the house you are buying it with – it makes total sense. And although you may not have heard of them, logbook loans work in much the same way, securing a loan against your vehicle instead of your home. Find out how they could work for you. How it works If you’re a car owner and you need a fast cash fix, a logbook loan can be a fast and hassle free way to solve your problems. You simply take your car to a lender, such as Loan My Motor and they will value it and offer you a loan based on this. They technically own your vehicle on a temporary basis, until you repay the loan. Just like a mortgage you have sole use of the car as usual and you will not lose the car unless you are unable to meet payments continuously. How much can I borrow? The loan you receive is based on the value of your vehicle but can be as little as £1,000, right up to £50,000. And each case is dealt with individually, as you arrange a repayment plan and loan term with the lender. You should consider at this point the affordability of the loan as if you go into it and cannot meet payments you could lose your car. The loan can be taken out over a 12-36 month period, making these short-term loans a manageable and affordable option. What are the risks? High interest rates and a disregard for credit ratings have made people suspicious of logbook loans. Although the interest rates are higher than a loan from the bank or building society, they are not as extortionate as payday loan companies which can make them a wise option. They are designed to be borrowed on a short-term basis, so you shouldn’t pay too much back in interest. The lenders don’t worry if you have a bad credit rating because they are getting security from the equity locked up in your vehicle. There is a risk of losing your car but as long as you meet repayments and keep in contact with the lender then it is extremely unlikely. The companies want to help you repay the loan and can do so if you explain your problem. If you rely on your car for work then you may want to think twice about a logbook loan. Where there is a risk of losing the vehicle, it is probably not worth doing so if it means you would jeopardise your income as a result of it. How do I get one? Phone up, apply online or go into the offices of a logbbook lender to find out how much you could borrow against your car. Take along a few documents about you and the car and within an hour you could be driving away with the cash you need.