Logbook Loans

Understanding Logbook Loans

This type of loan is quite similar to the Secured Loan as you will notice. However, it is considered a loan that creates a higher debt risk for you and your property.

The main reason this happens is that with the Logbook loans you have to give way the ownership of your car to secure the loan.

Usually, Logbook loans are smaller in size, but taking such a loan you risk losing your car while still having to pay the amount you borrowed and the interest rates. Because of the risk, this kind of loan is usually taken by individuals who need an amount of money urgently to cover an expense or other bills that they cannot afford at the moment.

The rationale behind the Logbook loan

In other words, you are taking out a loan against your car. You may be tempted to use this kind of loan if you are in urgent need of an amount of money. Keep in mind that if you have not still paid the cost of your car (or your car is under another loan) you cannot use this service. You have to be the registered owner of the vehicle and have complete current ownership over it to get the Logbook loan.

The loan company will keep the logbook while you pay back. Once the loan has been paid, you will get your logbook back.

This kind of loan is of higher risk to you and then if you miss any payment the provider of the loan may confiscate your car and you will have to sign a document that transfers the ownership to them. It is risky to take such a loan, as a single installment missed might leave you without a car.

Why do individuals take such high-risk loans:

Financial difficulty, emergency, and unplanned situations may lead you to take a Logbook loan. However, it is very common for individuals using this kind of loan to not be able to pay it back leading to losing their car’s ownership to the loan provider.

A logbook loan is not advisable as it has a very high interesting rate which will make it very hard for you to repay in the end. Individuals are driven to this kind of loan because the bank will easily provide it without any background checks or without checking your credit history.

It is for sure the type of credit someone will request when an unexpected situation has taken place and you are in desperate need of the money. If you have financial difficulties or other running debts you must avoid Logbook loans at all costs.

Is the customer protected?

What makes Logbook loans risky is that the protection the consumer has against the loan

provider is very small. Early late payments might result in more fees, while one missed installment will result in the loan provider taking legal action against you.

If you’re thinking about using a logbook loan as a way out of debt, you should talk to an advisor that can explain to you the risks and the way out of such a high-risk debt. If you notice that you are unable to pay for the next installment you must immediately seek help and advice to not lose property of your car. Make sure to contact us so that one of our expert advisors can go through your agreement and provide you with possible solutions.

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Customers can get free debt advice from the Money Advice Service – an organisation set up by the Government to offer free and impartial advice to those in debt. For more information from the Money Advice Service visit www.moneyadviceservice.org.uk. MAS is part of the Money & Pensions Service. We are not affiliated with MAS in any way.

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Become Debt Free specialise in providing and administering Individual Voluntary Arrangement (“IVA”) solutions to individuals based in England, Wales and Northern Ireland.  We do not administer Debt Management Plans, Debt Relief Orders, or any other debt solutions.  We only provide advice after completing or receiving an initial fact find where the individual(s) concerned meets the criteria for an IVA, therefore, all advice is given in reasonable contemplation of an insolvency appointment.

* To qualify for debt write off in an IVA with us, you must have a minimum of £7,000 of qualifying unsecured debt owed to two or more creditors.  The amount of debt write off is based on your own personal circumstances – typically this could be up to 90% of what you owe; and this has been achieved by over 10% of our customers who have successfully completed their IVA’s in the last 12 months.  The amount of debt write off differs for each customer and is dependent upon their individual financial circumstances and subject to the approval of their creditors.

Andrew Bowers is authorised in the UK to act as Insolvency Practitioner by the Insolvency Practitioners Association.

 

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