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How can logbook loans function?
Logbook loans are offered on the road and online.
You can borrow between #500 and #50,000, depending on how much your vehicle is worth, though you may be permitted to borrow up to half of the value of your car.
You will be asked to hand over your car’s logbook or automobile registration record when you take out a logbook loan.
These are the records that prove you’re the registered keeper of the car.
Taking out a logbook loan in England, Wales or Northern Ireland
You’ll also have to sign a credit agreement if you reside in England, Wales or Northern Ireland along with a form called a ‘charge of selling’.
This means your automobile is briefly owned by the lender but you’re still able to use it so long as you meet with all loan repayments.
In the event the lending company registers it the law only warrants a bill of sale. The lender must find a court’s consent if it’s not enrolled.
You should check whether the charge of sale is enrolled.
Bills available are not Utilised in Scotland
Getting a logbook loan in Scotland
Back in Scotland, ‘statements of sale’ can’t be used as security and aren’t legally binding.
Lenders in Scotland are so very likely to be working under charge agreements.
In the event the logbook loan is a ‘hire-purchase arrangement’ or even a ‘conditional sale’, protection and your customer rights under the Consumer Credit Act 1974 will employ.
Getting your loan
Normally cheque, which requires several days to clean pays you the mortgage.
They could charge fees of up to 4% of the loan for this, although some logbook loan companies offer a cash assistance that is fast.
Paying the loan back
Logbook loans operate up to 78 weeks, although you are able to pay it off sooner.
You may just be exceeding the interest rates.
In the last month, you’ll be expected to repay.
You must be certain you understand how the arrangement operates and which it is possible to afford the repayments.
How much does a logbook loan price?
Interest charges are APR or greater.
Per week, interest is charged on the amount of the loan.
So if you borrowed #1,500 and paid #55 per week for 78 weeks, you’d refund over #4,250 at total.
This means you would have paid over #2,750 in interest to be able to borrow #1,500.
Cons of logbook loans
What to think about before taking out a logbook loan
- The yearly percentage rate (APR) can be very large, therefore it is best to pay it off as soon as possible.
- There may be extra early repayment fees if you repay more than #8,000 in any 12-month period.
- Logbook loan lenders may ask for weekly payments and a few do not take Direct Debit therefore it can be tricky to keep on top of just how much you really owe.
- If you’re unsure about just how much you’ve paid back, ask for a statement of just how much you owe (known as a ‘statement of account’) that the lender has to provide you.
- How much you can borrow is based on the worth of your vehicle. A reputable lender will ask you to get it valued.
- Even if the vehicle has present finance contrary to it, you might continue to be able to acquire a logbook loan, but generally just if your current loan arrangement is coming to a end along with the outstanding amount is low. In all cases you will need to acquire approval.
If you can’t pay back your logbook loan
Logbook loan lenders have the right to use bailiffs to seize your vehicle or motorbike if you don’t meet repayments, although most won’t sell your vehicle until you have fallen behind with repayments.
The logbook loan lender would not have to go to court to repossess your vehicle.
If your vehicle is sold
You will be responsible for paying for the shortfall, if the sum it is offered for is the sum you owe.
A logbook loan company may take you to court to get this money back.
Alternatives to logbook loans
Logbook loans may appear tempting for those who need cash quickly and have a bad credit score, but there are always alternatives. We do not advise using logbook loans.
If you do, check that the lender complies with the code of practice, specifically and is a member of a trade body.
You have to borrow a small sum for a brief time and if you’ve got a very low income, you should consider consulting a credit union. However, you may have to open a savings account together.
Assistance from the authorities
Make certain you are receiving all of the benefits you’re entitled to.
You could be able to apply for an interest-free Budgeting Loan, if you have to borrow money.
Getting help with debt
Attempting to use a logbook lender could possibly be a indication that you’ve got some debt issues. Many organisations might be able to help you, and provide free debt information, for example StepChange Debt Charity and Citizens Advice.