Logbook Lending in the UK
When you’re really running low on cash and you can’t go to the bank to borrow money, one has to be creative and find alternative means to get it. If you’ve tried the cash advance and it did not work for you, you can try getting logbook loans in the UK, instead. This is a different product from payday loans bad credit funds, and it isn’t the same as borrowing against your salary.
To put it simply, it is cash that you can borrow based on the value of your car. It’s like a collateral but moved a couple of steps further because the lender will actually own your vehicle for the period of time that you’ve borrowed sum. You don’t have to turn over the actual vehicle though, and you can keep using your car or van for as long as you pay the amount back. When you aren’t able to pony up the cash, that’s when the real problems arise.
Payday loans UK are fast becoming popular in the UK because of its fast processing and simple terms. You have a car? You can borrow cash quickly and easily. Borrowers can get as much as £500 and £50,000, depending on the value of the car owned. Technically, one is only allowed to borrow up to 50 percent of the vehicle’s value.
It’s called logbook because the borrower is asked to hand over the car’s registration document, or vehicle logbook. Since these documents prove ownership of the vehicle, not having them means you don’t own the car anymore.
Other Requirements for Logbook Lending
In other areas, such as England, Wales or Northern Ireland, people who avail of these are also asked to sign a “bill of sale”. This is a form of credit agreement that means the company holds ownership of your vehicle. Again, you will still be able to use the car provide that you meet all of your payment schedules. The company then registers this document with the High Court in order to make it legally binding. Think of it as a notary public for similar documents. Bills of sale, however, are not used in Scotland.
With the “bill of sale”, the lender can repossess your vehicle should you default on your payments.
How Does it Work?
These online loans are traditionally paid by check, and the borrower will need to wait several days to clear. However, times have changed and even these kinds of monetary products now feature quick cash service. The only catch though is that there is an extra 4 percent fee for this, but we all know that people who need money in a hurry would say yes to this kind of thing.
Since you have basically put your car up as collateral, it also follows that the term is a lot longer than others. These short term loans can have a term of as long as 78 weeks, but the borrower of course has the option to pay earlier in order to get his car’s documents back a lot faster. There are also more flexible arrangements, such as just paying a monthly interest and repay the entire amount borrowed at the end of the term. This is good for people who are expecting to receive large sums at a certain point in time. Just be sure though that this money arrives on time so you don’t end up losing your car to the lender.
All in all, this financial product charges around 400 percent APR or higher. Interest is also computed each week. These are the same types of deals you would find from companies like cash converters. Here’s how it looks like: Borrow £1,500 and pay £55 a week for a period of 78 weeks and you would have shelled out over £4,250 in total.
Interest is £2,750 for the £1,500 borrowed. You decide whether you need the money bad enough to pay these kinds of interest rates.