Logbook Loans UK
As this is mainly a U.K loan, most people in the USA will not have heard about logbook loans. Basically a logbook loan is a loan that is given out in return for the applicant giving the logbook, or V5 form for your car, to the loan company, until the full amount of the loan and interest is repaid.
The V5 form contains all of your vehicles details, such as the identification marks, for example the registration number, VIN, chassis and engine numbers, as well as all of the details regarding the owner. When you take out a logbook loan, you borrow the money against the value of your vehicle, the lending company keeps a hold of the logbook until the loan is paid off. If the loan doesn’t get paid off the company can then claim ownership of the vehicle.
So Who Can Qualify For Logbook Loans UK?
People who have bad credit, arrears, defaults, late payments and bankruptcy can all apply for logbook loans. You can apply for a logbook loan at many banks as well as at many other independent lenders. Or you can even apply for your logbook loan at many place online, for faster payments. So basically any car owner can get themselves logbook loan simply by handing over your car registration details.
These loans are often viewed as being a viable solution for people who are going through desperate times, for example people who are in extreme financial difficulty and have so far been turned down by all of the other lenders because of their bad credit. But not everyone will agree with the way that the logbook loan lenders work. There have been many complaints from organisations in the UK and other groups that have tried to take steps to ban logbook loans. The idea of giving up your car and handing over the V5 registration to the lender, who will in effect be the owner of the vehicle for the time being, until the debt is paid, has been deemed unethical. More often than not the interest rates are extremely high, with some lenders taking in excess of 600% A.P.R
If you or the person taking out the loan fails to pay the debt back on time, then the lender then has the ability to claim the car as their own without any need for a court order. Another issue is that has been argued that it will encourage people already deep in debt to get further into the red.
The issues that make up the argument for banning this lending practice are that there is no protection for borrowers that fall deep into debt, the unfair collection practices, the jargon packed, confusing language used in the agreements, and the astronomical costs of these loans.
Is a logbook loan for you if you are in debt? I would strongly suggest that it wasn’t, but the final decision will obviously come down to you.
Posted by on May 9th, 2010 :: Filed under logbook loans uk
Tags :: car loan, cash for car, loans uk, log book loan UK, logbook loans uk
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