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.

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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.

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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.

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

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.