Have you ever considered logbook loans in St Aidan's Billingham? Logbook Loans, also commonly known as V5 Loans, can be the ideal solution if you are looking for a larger loan, perhaps with less than stellar credit. But before you make such a big decision and take on a long-term financial responsibility like this, you need to find out all there is to know about taking loans like this in St Aidan's Billingham.
Are these loans for you? Is putting your car up as collateral worth it, or is it an unnecessary risk? Can you keep using your car, or do you have to hand it over to the lender? Keep reading to find out everything you need to know about logbook lending and what you need to do in order to get one to finance your needs.
What Are Logbook Loans In St Aidan's Billingham?
Logbook loans are a type of secured loan that you can get on your car in St Aidan's Billingham. As the name suggests, you need to hand over the logbook for your car (as well as registration papers) and thus, the lender is given ownership over your car, in exchange for lending you money.
Be sure to compare logbook loans and lending companies before you pick the right one. Avoid scammers!
How Do Logbook Loans In St Aidan's Billingham Work?
How do you get one?
As mentioned earlier, logbook loans are offered as an exchange: you are given the money, but you have to hand over the registration papers and logbook for your car. That grants the lender ownership of your car for the period that you are repaying the loan. Thus, your car acts as collateral for this secured loan.
Getting logbook loans online is simple: you can apply directly on the website, in your own home. All you have to do is fill out some information and send the application in. Of course, you can also go and apply in person, if you feel more comfortable doing this face to face.
Something you need to know about this sort of lending is that if you cannot repay, the lender can take your car to cover the rest of your loan. This is an important aspect to consider, because it can make it a risky option in certain circumstances.
What is going to happen?
Before any transaction can take place, your car needs to be assessed in order to establish its value. The amount of money you receive depends on how your car is valued, as it needs to be able to cover the cost of the loan. Any reputable company will ask you to do this independently; if the lending company offers to make the assessment, it is advisable to look for a different one. It is very possible that the lender will assess your vehicle incorrectly to a lower amount so that they can profit more from its sale, should you default on the loan.
The exchange is finalised as soon as you sign the paperwork, including the credit agreement and the bill of sale. The bill of sale is important, as this is the document that allows you to continue to use your car as you repay the loan, even though ownership has been transferred to the lender.
In order for this paperwork to be valid, it needs to be registered with the High Court. In absence of this, the company cannot take your car without receiving court approval, first. It is possible to check whether or not the bill of sale has been registered by writing an application and paying the required fee at the Royal Courts of Justice in London. Learn more about how you can do this by accessing the National Debtline.
The money will be sent to your account after the application is completed. You can also get your money in cash with some companies, but keep in mind the fact that this feature can be expensive – it can cost you up to 4% of your loan.
Who can get one?
The good thing about a logbook loan in St Aidan's Billingham is that anyone can get one, as long as they meet some simple requirements. In order to be accepted for this type of borrowing, you need to own a vehicle, the vehicle has to be of greater value than the loan you are looking to get, and you must be in possession of the car’s paperwork and willing to hand it over, with ownership.
How much do you get?
The amount you can receive depends on several factors. The loans offered are typically between £500 and £50,000, which is a generous range, but that is based on how much your car is assessed at. You should also know that the same vehicle will not get the same value at different lenders, and you will also not receive a loan that is equivalent to the full value assessed.
You will get a percentage of that value, which can be lower or higher, depending on the lender. Some places will give you as little as 50%. Obviously, the less your car is worth, the less money you will receive. More importantly, in the eventuality of not being able to repay the loan, you lose out on a lot of money when you lose the car.
How do you repay them?
The term for repayment for logbook loans in St Aidan's Billingham is around 78 weeks, at most. Whether that is feasible or affordable depends, of course, on how much you get and what your income is. Payments will be made regularly, just like with any other kind of loan. If you can afford to repay the full amount earlier than the maximum term, you can go ahead and do so.
The interest rate on logbook loans in St Aidan's Billingham is quite high, reaching an APR of 400%. That means that if you stick to payments for the entire 78-week term, you may very well end up paying interest charges that are much higher than the loan you took out, in the first place.
There are agreements you can make with the company so that you can pay the interest in the last month of the contract. However, you also need to know that you should pay the entire amount by that final month.
What happens if you can’t repay?
Because logbook loans in St Aidan's Billingham are secured with your vehicle, in a situation where you are unable to repay the loan, there is the risk of getting your car taken away. Whether or not you are likely to get your car repossessed depends on how many payments you’ve missed. If you’re behind with only one payment, for example, you don’t need to worry.
Keep in mind that you cannot have your vehicle repossessed before getting a written notice. You then have 14 days to answer, and if you fail to respond, then they can come for your car. Remember that they do not need court permission if the bill of sale is properly registered.
The lender will sell your vehicle in order to make up for the money you still owe on the loan. But if the car does not make as much as expected, then it may not cover the rest of the loan. In that case, you will still be on the hook for that money, and you can be sued for it.
Remember to have your vehicle assessed by a third party and do not accept a percentage under 50% for your loan.
Pros and Cons of Logbook Loans in St Aidan's Billingham
You can get a large amount of money
One of the major benefits of logbook loans is that they can yield a significant amount of money. Because they are secured and based on the value of your car, the sum you can get will be larger than with an unsecured loan. This can open up possibilities for financing that you wouldn’t otherwise have. So, whether you need to cover a major purchase, a wedding or another event, an extended trip, a house remodel, etc., you can get the money you need and continue to use your car like you normally would.
You can get them with bad credit
An obvious advantage of secured loans is that they are available for people who do not have the greatest financial history. So, if you have bad credit, you don’t have to worry about not being able to get a loan or getting a very small amount. As long as you own a vehicle, you can offer it as collateral and get your loan without having to worry about your credit history and whether your score will stop you from getting the best deal available.
You can continue using your car
The other thing to point out is that even though you are handing over ownership, that does not stop you from continuing to use your car like you normally would. The bill of sale enables you to keep driving it, so there should be absolutely no change in the way you live your life or use your vehicle. As long as you stay on top of payments, there doesn’t have to be an issue with the fact that you don’t have ownership over the car while you pay off your loan. It’s a win-win situation: you get to borrow money to use and get to keep your car.
The interest rate is very high
The problem with logbook loans is that the interest rate is very high. That means that you not only end up paying a lot of money for it, but depending on how long you repay the loan, you might actually pay twice as much as you borrow only in interest charges. That makes this lending option extremely expensive, so it may not be your first choice, when it comes to financing.
You can get scammed
Something to pay attention to is the lending company you’re working with. If you’re not careful, you may find yourself in a situation where the lender is trying to scam you. Here are some of the things that should trigger alarm bells: if the bill of sale is not registered, if the company insists on making the value assessment themselves, or if they do not transparently disclose transactions they’ve made with your car.
If they assess the car, they may set a lower value for it. And if they repossess it, be sure to check the sale and how much money it yielded. Some lenders will try to conceal the real amount the vehicle sold for in order to make you pay more to supposedly cover the full amount of the loan.
You can have your car repossessed
But by far, the biggest issue with logbook loans is that you can lose your car if you find yourself unable to pay off the loan. Financial emergencies can take place at any time, and you may need to cover another urgent payment, lose your job, etc. and become unable to repay your instalments.
Once you miss enough of them, it becomes harder and harder to catch up, and you risk losing your vehicle. Especially if you don’t receive the full value, you’re also missing out on a lot of money. It’s a very risky financing option that you should only consider if you’re certain you can successfully pay off the full amount.
What Are The Alternatives To Logbook Loans In St Aidan's Billingham?
Depending on how much money you need, what you were planning on doing with it, and what your financial situation is, you may be able to find some viable alternatives if the risk of handing over ownership of your car is too great for you, or if you don’t own a car.
- Payday loans
- Doorstep loans
- Credit cards
All in all, logbook loans in St Aidan's Billingham can be an excellent financing option if you own your car and are comfortable with handing over the logbook and registration of your vehicle. The benefits are attractive, but there are also disadvantages to consider, so make sure you weigh all the information before you make a final decision.