All you ever needed to know about logbook loans

No doubt, if you are reading our website at Field Loans, you are certainly looking at a loan product of some kind. These loans are dominating the microlending market in the United Kingdom and it is fairly simple to see why they have become popular.

The main reason however, is that they can be taken out by people suffering from bad credit while the fact that they can offer a fairly big loan amount (depending on the condition of your vehicle) also make it a favourite.

And don’t forget the turnaround time. Unlike a loan from a financial institution which can take weeks before they give you an answer, you will know the outcome of your logbook loan application in a matter of minutes. The amount agreed upon will also be paid into your account within twenty-four hours.

But what else do you need to know about this versatile loan offering?

How exactly does a log book loan work?

Now this might be the first time you hear about a loan product such as a logbook loan and we are going to assume you have not read other sections of our website as of yet. A logbook loan is a loan product that you can secure if you own a vehicle.

Your vehicle (either a car, motorbike, truck or even a caravan) is valued and based on your monthly income, we then offer you a loan against its value. If you accept, we pay the money into your account while you sign over your vehicle’s logbook to us. Simply put, we own the vehicle for the duration of the loan where it acts as collateral to ensure that you make your monthly instalments and do not default. If you do, we have the right to sell your vehicle to recoup our costs. Of course, we do not do this after just one missed payment, although legally we have the right to.

Perhaps one of the greatest advantages of a logbook loan is the fact that you can secure one, no matter your credit status.

And the costs involved?

Now we are not going to beat around the bush here. Credit products, especially those afforded to people with a bad credit rating are more costly than a regular loan from your local bank. But remember, they won’t even offer you a loan product because of your bad credit history. So what are the costs involved with a logbook loan? Well, it all comes down to the interest associated with it.

Generally, logbook loan products have a higher annual percentage rate (APR) than most other loan products. What is an APR? Simply put, it is the total interest you will pay on your loan amount annually. So the lower it is, the lower your monthly payment is. The APR for logbook loans is generally set at around 400%. But why is it so much more expensive? Well, the main reason is simple – anyone applying for a logbook loan is exempt from a credit check, so even those with a bad credit rating can be approved.

No doubt, it is important to take into account the costs involved, but for people needing money quickly and having no other outlet, a logbook loan makes perfect sense.

Are there any dangers involved with securing a logbook loan?

We have already discussed the high cost of a loan such as this but what about the other dangers associated with this type of loan. Perhaps the biggest danger is the fact that you could lose your car through repossession. Remember, for the duration of the loan, you have effectively signed over the car’s ownership to your loan company of choice.

Now should you default on a payment, they have every right to sell your car and recoup their costs and some will do this without blinking an eye. At Field Loans however, we do not believe this is the best course of action unless we simply have no other choice. Should you miss a payment, we will give you every chance of making up for that oversight. If you miss two payments, we will begin to discuss any problems you may be facing. It is only when you miss three payments that we will start to look into repossession. The moral of the story is simple. If you cannot make a monthly payment or you are really struggling financially, come and chat to us. Together, we can come up with an amicable solution for both parties. This might mean we tag a missed payment onto your loan, thereby adding a month to the term, or we might even renegotiate the terms of the loan.

Should I be applying for a logbook loan?

Well, at the end of the day, only you can really answer that question. If you suffer from bad credit, the chances of you securing a loan elsewhere are slim. With a logbook loan, your vehicle means that you can secure a tidy loan amount, much more in fact than something like a payday loan, another bad credit loan option.

Rest assured, we will never approve a loan product that will put you under undue financial stress.