From inception, logbook loans have been marred with misconceptions and skewed fallacies. You simply need to scour the internet to fully appreciate the extent of the misinformation. If you are thinking of applying for a logbook loan for the first time, it is essential that you understand logbook loan facts with the sole aim of making an informed decision. With that said, let’s take a look at a number of logbook loan facts that you should be familiar with.
Logbook loans are secured loans
Those telling you that you don’t need security when applying for a logbook loan are simply misleading you. In fact, logbook loans can be aptly compared to secured loans. You need to set up your car as collateral for the entire period of the loan. When applying for logbook loans, you simply sign off ownership of your car to the lender for the determined period of the loan. In other words, you cannot qualify for a V5 loan if you do not own a car that can be used to secure said loan.
Your credit history is a non-issue
The need for an excellent credit history is crucial if you want to improve your chances of approval and minimize rejections when applying for a loan. However, that is not the case when it comes to logbook loans. Your credit history does not in any way negatively affect your chances of approval from lenders who offer logbook loans 24/7. Irrespective of how bad your credit score is, you can always be assured of approval when applying for a V5 loan provided that you show that you can repay the loan.
The car to be used as collateral must not be attached to any other loan
In essence, you can only use a car that is free from any financing as collateral for a logbook loan. If it has any attachment to an already existing loan, logbook lenders will reject your application. In addition to that, the car must be in good condition, serviced on a regular basis and its insurance, as well as tax details, must be in order.
A car, van, caravan or even motorcycle can be used as collateral for a V5 Loan
The fallacious belief is that only a car can be accepted as collateral when applying for a V5 loan. However, this is nothing more than a rumour as you can also use a motorcycle or even a commercial lorry as collateral provided that they are in good shape and the amount you seek is not more than 50% of their current market value.