How exactly does a logbook loan work?

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Logbook loans are becoming a very popular way to lend money in the United Kingdom, especially over the past five years. Many people are turning to them as a way to get cash, especially in times of emergency.

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But how exactly do these loans work? What do they entail?

How it all works

If you have a car, a motorbike, a caravan or truck, you could be eligible for a logbook loan. Your vehicle has value, and a logbook loan sees you given money against that value. During the duration of the loan, your car acts as security for the loan. This means the lender keeps your vehicle logbook or V5 document.

Effectively, they own the vehicle for the duration of the loan. This protects them should a payment (or multiple payments) be missed. They then have a legal right to sell the vehicle to recoup any costs. If any extra money is made during the sale, it will be given back to the vehicle’s original owner.

How much can be borrowed with a logbook loan?

We offer logbook loans from £500 to £50 000. Of course, the amount that you qualify will depend on a few things.

Once our assessors have had a look at your vehicle, we will assign a value to it. We then will give you a loan up to 50% of this value while you continue to use it on a daily basis.

What documents does a loan applicant need?

When applying for a logbook loan, you will need to bring a number of documents to complete your application. These include:

  • Proof of address (a utility bill will suffice)
  • Proof of income (your previous three months wage slips)
  • Bank statements (for the previous three months, or if you are self-employed, then six months)
  • The log book or V5 document for your vehicle
  • The MOT certificate for your vehicle
  • Proof of comprehensive insurance

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Your vehicle must be comprehensively insured. This again helps to protect our investment against accidents, weather damage, and other eventualities. More importantly, you must own the vehicle and it must be fully paid off. It cannot be owned by a spouse, sibling or parent.

Apply today!

So if you are needing cash in a hurry and you have a fully paid off, comprehensively insured vehicle, apply here now .

Why hiding debt from your partner is a bad thing

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So you have decided to take out a guarantor loan because you need some cash in a hurry. You even have secured someone to act as a guarantor. You have done all the research, found the best rates, know what your monthly repayments will be and you are more than happy you can afford it.

But have you told your partner yet?

Any relationship is based on trust. When it comes to a form of debt, people often choose not to tell their partners? Why, well maybe its embarrassment, or maybe they feel they must deal with the debt alone (a really bad idea if you share all other monetary obligations).

Worried Couple Discussing Domestic Finances At Home

 

Your debt becomes their problem

A recent study has found that across the United Kingdom, people are keeping as much as £41 billion debt secret from their partners. So what implications does this have? Well, if you have debt and pass away or are declared insolvent, did you know that your partner will be liable to settle that debt. It seems a bit unfair to have that hanging over their head when they didn’t know about it in the first place! Not only that, but should they struggle to pay it (a distinct possibility when they knew nothing about it and would not have planned for it), their credit score will be affected negatively.

Always be open in monetary discussions, even those about debt

So what is the best course of action? Well, as we have mentioned above, many people are embarrassed about any debt they might incur, but it is necessary to disclose it to your partner. Not only is it the right thing to do, it’s just fair even though it might be a little awkward at first.

Perhaps get a financial advisor involved to draw up a plan of action when it comes to both parties’ finances. That way, you can both be totally open with each other. Even something like hidden savings should be disclosed, even though you might be trying to surprise him/her with an overseas holiday! Disclosing all your financial obligations will also open a whole new level of trust in the relationship, something that can bring parties even closer together.

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So don’t be afraid! Disclose your debt to your partner, it is the right thing to do.