The Covid-19 pandemic has fundamentally changed our way of life. Right now, health is our biggest concern. However, with businesses closed and workers facing salary cuts or dismissal, many people are struggling to keep up with their bills and other financial obligations. The crisis also means uncertainly for lenders, as some have started suspending the provision of loans. If you have tried securing a loan with no success during this coronavirus period, you may want to consider logbook loans.
They are types of loans, which a borrower uses a car, vehicle, or motorbike as collateral. You will need to sign a credit agreement and a legally binding documenting known as a “Bill of Sale” to secure a logbook loan.
During the loan repayment period, the lender will be a temporary owner of your vehicle or motorbike. They will keep hold of the logbook. What’s great, though, you will keep using your car as usual. The logbook will be returned once you’ve completed repaying the loan.
You are more likely to qualify for good interest rates when you use your vehicle as collateral because, to the lender, you are a low-risk borrower. It is possible to get a logbook loan even if you have a bad credit history. However, the amount a lender can give you usually depends on the value of your vehicle and how much you can afford in monthly payments.
If this option is best suited for your situation UPmoney provide an online comparison service which can short list the best lenders for you with out affecting your credit rating.
The qualifying criteria vary among lenders. Most of them typically require that you are UK resident, 18 years old or over, have a source of income, physical address, and vehicle registration document with your name on it.
We mentioned earlier that you can get a logbook loan even when you have a poor credit rating. Unfortunately, you may not qualify if you’re declared bankrupt or are already in a debt management plan.
The loan providers consider the trade value of your vehicle and it should be high enough to cover the full amount of your loan. Trade value essentially refers to the amount of money a vehicle owner would be given if they part-exchanged their vehicle at a garage.
The vehicle must be roadworthy and insured. You cannot use a vehicle on Statutory Off Road Notification (SORN) as security.
It is advisable to take out a loan you can afford to repay on time. Please note if you fall behind in monthly payments or fail to keep terms of the credit agreement, the loan provider can reprocess your vehicle to recover their money. In case your car gets reprocessed but doesn’t cover the outstanding debt, you will still have a balance.
You should contact your lenders as soon as possible if at some point you’re struggling to keep up with the monthly payments. The loan provider and you can make alternative arrangements so that you don’t lose your vehicle.
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