What are Logbook Loans?

Perhaps you've heard a thing or two about logbook loans, but are not yet sure about what they are exactly. This is a type of secured loan which is primarily targeted and offered to people who have a bad credit rating. These people would otherwise fail to qualify for a regular loan if they'd tried to go to a high street bank and are therefore left with limited options as to where and how to get some money when they need it.

Logbook loans are a short-term type of loan secured on your car. In this case, your car's logbook registration document works as a collateral for the loan and it stays in the possession of the lending company until the time you have successfully paid the loan back in its entirety. If you fail, or default on your payments for this loan, the lender has legal right to repossess your vehicle and sell it in order to balance his losses. He can do this even without a court decision.

The amount of money you can loan is determined by your monthly income (you need to present your last paycheck) and the estimated value of your car. Most companies offering logbook loans accept only vehicles that are less than 10 years old (although there are differences between one lender and the other regarding this). The vehicle also needs to be in a good condition and free from any finances. This means that it shouldn't have any loans attached to it. Also, you should be sure that all taxes on the vehicle have been paid for and that the vehicle has been properly insured. Of course, it goes without saying that the car has to be registered on the name of however is applying for the loan and not on someone else's.

The application process for this type of loan is pretty easy and straightforward. The first step is finding a logbook loan company or two that you believe suit your needs the best and getting a free quote from them. At this beginning stage, the lender has no right to ask you to commit to anything. Once you get that free quote and you believe you've found the best logbook loan lender, you need to arrange a meeting with them. Most logbook lenders will require that you meet at their offices, so what you need to do is drive there in your car for it to be evaluated and bring the necessary documents (logbook, MOT, ID, proof of address, proof of income...). The entire application and approval process lasts for only a few minutes and the money will be deposited on your bank account within 24 hours.

Once everything is done here, you can still use your vehicle, but the logbook stays in the lender's possession. He can use it to repossess the car if you default on your payments.