The unease, the tribulations, the harrowing experience of having a poor credit rating is something that most UK individuals can identify with. For long, individuals with a poor credit rating have been on the receiving end and faced backlash from mobile phone providers as well as lenders because of the status of their credit score. Their applications for a loan were outrightly rejected and what this meant is that they had to look for other alternatives. Luckily for most UK individuals, logbook loans have saved the day. The meteoritic rise of logbook loans is testimony to the fact that scores of UK citizens with a poor credit rating have embraced this loan instrument with two hands.
A logbook loan is in simple terms a loan that is secured using a car logbook. In essence, a person’s car is used as collateral before they can be approved for this kind of loan. This type of loan is open to UK persons residing within the UK that are beyond the age of 18 years and legally own a car. A V5 document provides proof of ownership and is one of the documents that you need to produce prior to availing a Simple Logbook Loan.
In addition to this, you need to provide your lender with proof of address, bank statements, tax details, insurance details of your car, proof that you receive regular income as well as ministry of transport certificate. Once you provide all these documents, your lender will process your loan within the shortest time possible.
Do I need to have a good credit score to be approved for a logbook loan?
No. in fact, no credit checks is the biggest selling point of logbook loans. The fact that anybody can apply and get approved for a logbook loan without having to worry about credit checks has immensely escalated the popularity of logbook loans.
Approval for logbook loans is almost always guaranteed provided that the car you pledge as collateral is in good condition. In most cases, lenders require that your car shouldn’t have been in use for more than 10 years. That aside, there are also instances when vintage cars as well as classic cars that have been in use for more than 10 years might be accepted. The secret is in comparing various lenders and choosing one that best meets your needs.
While logbook loans have been well received in the UK, there is no denying that there are a number of risks associated with taking out a logbook loan. Considering the fact that you use your car as security, there is always the risk of repossession should you fall way back in repayments. It is probably for this reason that lenders advice you to contact them should you experience difficulties in meeting your monthly repayments. Secondly, logbook loans attract very high interest rates. In fact, the average APR is 400% and this is on the higher side. Some lenders charge very high interest rates that you actually end up paying twice the principal amount on your loan. All in all, if you are able to repay your loan without fail, you could in the long run be able to improve your credit score for the better.