Log book loans
Log book loans are loans taken out with your car as security. You can borrow as little as you need or as much as 75% of the value of the car. On average, you are charged with an admin fee and 10% interest every month. You can settle early but most people who take out these loans are struggling anyway so paying off early is not really an option for them.
How to get a loan using your car as a security?
To be eligible for a log book loan, you must be the owner of the car and have all outstanding finance on it paid off. There are some companies out there that will accept your application if you have just a little bit of outstanding finance. You will need to be over 18 but some companies prefer over 21’s and you must be a UK resident. Depending on the value of the car, you can borrow from £500 to £50,000. Some of the loan companies will also let you back the loan early without any early repayment penalties to pay. With most places offering money the same day or the next day, it’s very hard not to be tempted by the quick cash.
Who are log book loans for?
Log book loans are usually for people who have a low credit rating, bad credit, have no proof of income or have been refused a loan in the past. There is no need to give a reason as to why you need a loan and most companies won’t even ask. This is very beneficial as bigger loan companies and banks may sometimes refuse your loan application depending on your circumstances and finance situation. So you can be assured that you can take out a loan for personal or business use with no questions asked provided the log book is in your name.
So what’s the catch with log book loans?
Entering into a legal contract means that if you do not pay for whatever reason, the loan company are legally able to repossess the car and sell it on to recover the cash that is owed to them. The real catch is the loan repayment amount and the term. Many loan companies do not use the phrases months or years anymore but instead they use weeks. By stating the loan term in weeks it tricks the borrower into thinking that the loan term is not actually that long when in fact it is. Here is a typical example: if you borrow £1,500 off a car you own, repay £53.60 a week for 78 weeks (just under two years), the total repayable is £4,180.80. That’s one and a half times more than the loan amount! This is where the bulk of the money is made, in interest. If you have no choice and have to take out a log book loan, then it is advisable to pay it back as soon as possible before the loan term ends to save money.
After much research on the subject, it has been found that log book loans is a legit but their tactics the companies employ and their customer service skills are non existent. Many previous clients have had bailiffs take their car when they have been up to date with payments. Some have even said that the repayment date fell on a Sunday where you need to call each week and pay by card but as they are closed on Sundays, you are charged a £12 late repayment fee. Log book loans are like loan sharks with extortionate repayment fees and preying on the poor so stay away if possible.
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