A car logbook is basically an ID book for your car, and it lists things such as the chassis and VIN (Vehicle Identification Number) numbers, the registration number and the details of the registered owner.
Many people are not aware that the logbook of the car can actually help them to get some much needed money in the form of a loan. Plus the best thing is that the owner is allowed to keep using the car during the loan repayment period. This type of loan, known as a logbook loan, should not be confused with a standard car finance loan as the two are very different. Car finance loans allow people to purchase their car in the first place, whereas a logbook loan allows you to borrow money to spend on whatever you want or need while using the car as security to minimize the lender’s risk.
There are a number of differences between a logbook loan and other forms of credit, and you need to be aware of these before you consider taking out a logbook loan. Firstly, the terms of the logbook loan will require you to surrender the logbook and the car in order to secure the loan, however, you will be allowed to keep using the car during the repayment period.
Secondly, there are no credit history checks at the time when you take out the logbook loan, so even if you have a less than sparkling credit history, you will be able to borrow money when you have been turned down elsewhere. However, the amount you can borrow will depend on the car you have and its age, condition etc.
The person applying for the loan will need to fulfill some basic conditions in order to successfully take out a logbook loan, and these are:
The car that the logbook is for should not be more than 8 years old and the car must be in a good state of repair.
There should be no outstanding finance or loans already taken out on the car. So if the car is being used as collateral for another loan, this must be paid off in full before a logbook loan can be granted.
Before applying for a logbook loan, the car that is being put up as collateral has to be properly insured and taxed in line with local laws, with no missing payments. Any outstanding money owed to the tax office or the insurer must be paid off in full before applying for a logbook loan.
The person applying for the loan needs to prove that they have a regular income and can meet the payment requirements.
The person applying for the logbook loan must have their name on the logbook.
Like any other type of loan that has collateral secured on to it, the logbook loan repayments must be paid on time, otherwise the company who issued the loan has every right to take possession of the vehicle should the owner default.
Logbook loans are usually taken out over a short term in much the same way as a payday loan. However, they are often a preferable option as they can offer larger loans over a longer period of time, thus allowing for lower repayments. Since the car acts as collateral these loans can be obtained even if the borrower does not have good credit.
Hopefully, this article has given you a broader understanding on what logbook loans are and how they work. There is no doubt that they can be of great use to those people who are looking to secure some much needed money when they have been turned down elsewhere.
Hugh Tyzack is the managing director and founder of loansforbad-credit.co.uk – a company specializing in providing loans to those with bad credit ratings. You can find out more information about the loan solutions on offer, including logbook loans, by visit his website. Alternatively you can follow Hugh on Twitter @badcreditloans8 and also on Google+.