In a world that is hell bent on giving those with a perfect credit score preferential treatment, getting the required loan facility when you have a poor credit rating can be difficult and exasperating. Most of the times, those whose credit scores are wanting find themselves in unfamiliar grounds and having to make great concessions just to be considered for a loan or in some cases, a mobile phone contract. While this was largely the case in the past, the unveiling of logbook loans changed the ballgame. Those whose credit scores weren’t perfect finally had a loan product they could rely on and get the much-needed cash advance without worrying about the status of their credit score.
What is a logbook loan?
A secured type of loan, a logbook loan or otherwise known as a v5 loan is a bad credit loan that is secured using a person’s vehicle. This loan product is perfect for individuals with a poor credit rating and who struggle to get loan facilities from high street banks because of their credit score status. So long as a person owns a car, they can be assured of a logbook loan their credit rating notwithstanding.
Can anyone apply for a logbook loan?
Basically, logbook loans are open to everyone although they tend to be popular among individuals with a low credit score. The aspect of no credit checks appeals to those with a history of CCJs or defaults as it greatly minimises the risk of rejection. That said, the eligibility requirements for a logbook loan are that a person should first and foremost be a UK citizen. To prove this, you need to provide your lender with a copy of your identity card. It also shows proof that you are above the age of 18 years. Secondly, you need to legally own either a motorcycle, a personal car, a van, a commercial lorry or a truck that you will set up as security for your loan. Other requirement documents include utility bills (they provide the lender with proof that you reside in the UK), a copy of bank statements (indicates or shows you receive regular income), MOT certificate (shows that your car is actually road worthy or in good condition) and your car tax and insurance details.
Benefits of applying for a logbook loan
No credit checks
If there is something that has made logbook loans very popular, it has to do with the fact that applicants do not have to contend with credit checks. Irrespective of the state of your credit rating, you can always be assured of approval when applying for a logbook loan provided that you are eligible.
Applying for a logbook loan is simple. In fact, the requirements are pretty basic. You do not have to worry about complex application procedures or thorough screening as is the case with high street banks. If you are a UK citizen of age and own a car you can set up as collateral, you are good to go.
Opportunity to repair your credit score
Applying for mainstream loan products when you have a low credit score is a herculean undertaking. High street banks will always decline your application because of your poor credit history. On the other hand, logbook loans provide you with the perfect opportunity to rebuild your credit history provided that you make your repayments without defaulting.
That said, there are also some demerits of applying for a logbook loan. Given the high-interest rates, chances of getting deeper into debt are high. You also stand a chance of losing your car to lenders especially when you are unable to furnish your loan. In this regard, do proper research and estimate your budget before taking out a logbook loan.