Key Considerations When Taking out a Logbook Loan

When you have a poor credit history, finding a personal loan you can easily get approved for is going to be a struggle. In fact, you might receive more rejections than approval in the end. This is where alternatives such as logbook loans come handy. With logbook loans, you can have bad credit and still get approved fast. This is because the loan type is specifically offered for people with bad credit problems. If you’re ready to avail the loan, here are key factors to consider if you want logbook loan:

1. Budget

Budget is key when applying for any type of loan. Knowing how much you need and what you can afford will ensure that you won’t borrow more than necessary. Otherwise, you may be putting your finances at risks. When you borrow more than what your budget allows, you’re not only risking increased interest rates and penalties but also vehicle repossession.

2. Loan amount

Whether you need a small amount or a large amount of money, logbook loans may be perfect for meeting whatever personal need you have in mind. With logbook loans, you can borrow money from as small as £500 to as much as £25,000. Some lenders even offer loans up to £50,000. As long as your vehicle’s value meets the loan requirements and your budget is sufficient to handle the monthly repayments, you’re on your way to getting approved for a logbook loan fast.


3. Repayment terms

Repayment terms for logbook loans are not as lengthy as other types of secured loans such as mortgage loans. In most cases, you’ll be given 12 to 36 months to repay your logbook loan. For large loan amounts, this may not be enough. But for smaller loan amounts, the repayment terms offer just enough time so you can make budget-friendly repayments each month. Most lenders let you choose to pay the loan either bi-weekly or monthly.

4. Representative APR

Before you sign any logbook loan deal, it’s important to fully understand the concept of representative APR. APR, which stands for annual percentage rate, is the financial concept used by lenders to advertise logbook loans. When you’re shopping around, you’ll probably see deals with 400% APR on average. The APR represents your loan’s cost inclusive of interest rates, admin fees and other related charges on an annual basis.

It is also important to remember that the representative APR may not be the actual rate you’ll be able to avail. Only a small percentage of borrowers get to avail the rep APR. For the rest of borrowers, you are likely to get charged more depending on your credit score and the current market rates. There are also deals that may offer lower APR. All you need to do is compare your options as thoroughly as you can to find the most affordable deal available in the market today.


5. Repossession

There’s also the matter of repossession to think about. Logbook loans are risky because it is a secured loan. If the borrower is unable to repay the loan, lenders may resort to vehicle repossession to cover for your loan balance. To avoid such a consequence, nothing is more important than planning your loan thoroughly starting from setting your budget and how you intend to repay the loan. As long as you don’t miss any repayments, you wouldn’t encounter any major problem with logbook loans.

5 Alternatives to Secured Loans

If you don’t have any property or asset to use as collateral for your personal loan, this is where unsecured loans may be a viable option. Whether you have good credit or bad credit, there are a number of unsecured loans ready to help you deal with any financial emergencies. Here are 5 unsecured loans that may be good alternatives to secured loans:

1. Credit union

If you’re a credit union member, you don’t have to look elsewhere for a quick cash loan. The loan offers may not be as much as what a secured loan can offer but credit unions can enjoy lower interest rates than other types of unsecured loans. With credit unions, you may be able to borrow between £500 and £5,000.


2. Credit cards

You can also always resort to credit cards to tide up your short-term financial needs. Credit cards come handy for most purchases nowadays. If you need cash, you can always use your cards cash advance. Just make sure you pay your bill in full to avoid incurring extremely high interest rates.

3. Peer to peer loans

Another type of unsecured loans that’s been gaining ground in the UK market is peer-to-peer lending. With this type of loan, you can borrow directly from the lender. There’s no need to go through the middlemen like how it is with banks. Just go to a peer-to-peer lending website and post the amount that you need. If you meet the lender’ requirements, you should be able to get your cash within 24 hours.

4. Guarantor loans

Guarantor loans are another type of loan that does not require collateral but it does need you to bring a guarantor to co-sign the debt agreement with you. Guarantor loans offer larger loan amounts than other types of unsecured loans because of the guarantor involvement. This type of loan is specific for people with bad credit looking for a fast, low cost alternative to secured loans.


5. Payday loans

Payday loans are the most controversial type of unsecured loans. These are loans offered for people with credit rating issues. As the name suggests, payday loans are loans that need to be repaid on your next paycheck or in the next 28 days. Payday loans are controversial because of its steep interest rates. On average, payday loans are advertised with 1,000% representative APR. It’s not only expensive but it’s also traps most borrowers into a cycle of debt.



What are the Different Types of Secured Loans?

If you’re looking to borrow money and you’re willing to use your asset or property for collateral, you might find great deals when you opt for secured loans. Secured loans, as its name implies, are personal loans secured on an asset such as your home, vehicle, bank accounts, stocks, bonds and more. Because there’s security, the risks are lower for lenders allowing them to offer borrowers loan deals with lower interest rates.

If you need a large amount of money for a financial emergency or investment, secured loans may be the best option you can take advantage. Here are some of the most common types of secured loans available in the UK today:


Mortgage loans are among the most common secured loans for people looking to buy a house. This type of loan is secured by the property you are purchasing. In other words, your home is at risk for foreclosure in the event that you are unable to pay your monthly mortgage payments. Since homes are a major investment or purchase, mortgage loans come with longer repayment terms usually lasting for 15 to 30 years. The interest rate is also lower in most cases because of the security involved.

Home equity loan

If you are currently a homeowner and you want to borrow on your home’s equity or line of credit, you can do so with home equity loans. This type of loans is essentially a type of second mortgage allowing you to cash in on your home’s equity. This type of loan is usually offered for borrowers who wish to remove their homes, consolidate debts or fund college education. With home equity loans, the maximum amount you can borrow will depend on the current market value of your home and how much you’ve already paid on your mortgage.

Auto loan

An auto or vehicle loan works just like your mortgage loan. The car you’re purchasing will be used as collateral that in the event of nonpayment, the lender can repossess your vehicle. With this type of financing, the lender usually pays for your vehicle in full then you pay your lender on a monthly basis including interest. Before you can avail an auto loan, lenders have a few key requirements you need to meet. You must live in the UK with a steady stream of income per month. You must also have a good credit history to be able to avail the lowest interest rates available.

Title loans

Title loans, on one hand, are loans that use your asset or property title to give you a personal loan. For example, you can use your paid-off vehicle’s logbook document to take out a logbook loan. In order to avail this type of loan, you need to meet the basic requirements as with other types of loans. But there’s one advantage with title loans. It is usually available for people with bad credit. You’ll need to pay higher interest rates in exchange but for most people who cannot avail a loan elsewhere, title loans come as handy alternatives.

Savings-secured loans

If you have money stashed on the bank, you can use that to secure your loan. There are lenders offering savings-secured loans for people who don’t have a home or a vehicle they use as collateral. When you opt for this type of loan, your lender will require your bank statements. If approved for the loan, the bank will place a hold on the funds until you’ve paid off your loan in full. Other than savings, you can use your CDs or bond certificates to avail this type of loan.



Why Secured Loans are Better

There are two main categories wherein most if not all loan types fall into. They are secured and unsecured loans. Secured loans are loans that require a security while unsecured loans do not. If you’re choosing between the two main categories, secured loans may be a better option for a number of reasons. Here are some advantages you can enjoy with secured loans:

Larger loan amounts

With the security requirement, borrowers are able to take out larger loan amounts with secured loans as opposed to the meager offerings of unsecured loan providers. In general, you can borrow from £1,000 up to £150,000 or even more. When it comes to meeting a wide variety of financial needs, secured loans win hands down.

This type of financing comes handy for minor financial emergencies such as overdue bills to major financial expenses like medical-related expenses. You can also take out a secured loan to fund a business start-up or for down payment of a new house. If you’re off to vacation and you need cash, you can also rely on secured loans to save the day.


Longer repayment terms

It follows that secured loans come with longer repayment terms. In comparison with unsecured loans, which usually have repayment terms from 12 months up to 36 months, secured loans can be repaid from a year up to 20 years or even longer. You can repay your loan on a monthly basis. Length of loan repayment will depend on how much you intend to borrow and how much you can afford to repay on a monthly basis. Your lender will offer you several repayment options to consider and choose from.

Lower interest rates

Because of the security requirement, the risks are lower on your lender’s end. This also means that cost of your loan will be more affordable than unsecured loans. Take for instance home equity loans. When you borrow this type of loan providing your home equity as collateral, you’ll likely pay less than 10% in interest rate. If you opt for an unsecured loan, on one hand, the interest may be multiple times more costly. This is because unsecured loans are usually offered for borrowers with bad credit. Since there’s no security involved, the risks are higher on the lender hence the costly interest rates.

What are the potential risks?

There’s no question to the fact that secured loans are more affordable than unsecured loans especially if you have a good credit score. But other than the cost, another key consideration to keep in mind is the risks involved. With secured loans, the only high risks you need to consider is repossession. Whether you put your house or vehicle as collateral, your lender now has the right to recover these assets in the event that you are unable to repay the loan. Repossession is often the last resort for lenders. As long as you are paying your dues on time, there’s nothing to worry about.

Are secured loans still better?

Despite the risk of repossession, secure loans remain a better option for borrowers with good credit and who are looking for a low cost loan to meet a wide array of financial needs. The trick is for borrowers to plan their borrowing thoroughly. If you’re going to take out a loan, a secured loan in this case, you need to make sure that you’re only borrowing what you can afford. You also need to commit to repay your loan on time each month. Otherwise, you are putting your credit score as well as your finances at risks. Either you pay a higher interest rates because of late payments or risk repossession because of missed payments.