Many people with bad credit look to take out cash from their vehicle by means of a Logbook loan. This is because many Logbook lenders don’t require a credit check when working out the details of the loan.
However, Logbook loans aren’t only for people with bad credit. They’re also handy if you need cash fast. You can typically have money in your bank account within 24 hours. That makes them the perfect solution when you’re cash-strapped and are faced with an unexpected emergency. If you don’t have a bank account, some lenders will pay you cash when you take out your loan.
How Logbook Loans Work
Since a logbook loan uses your car as security, you’ll want to know how to calculate how much your car is worth to determine how much money you may be able to secure via a logbook loan. The lender will have the final say as to how your car is valued for a loan so it pays to shop lenders if you are looking to maximise the amount of money you can borrow against your car
Since the loan is secured against your car, the lender will require you to supply your car’s logbook as proof that you own the vehicle. You’ll also need to bring a photo id and a bill with your current address.
The Logbook loan company will require you to sign a bill of sale for the vehicle. This is what protects them should you fail to repay your loan. It allows them to repossess your vehicle without requiring them to initiate separate legal proceedings for the repossession. However, before they can repossess your vehicle, they are required to send you a default notice.
The company providing the loan will require that your vehicle be fully insured. You can continue to make use of your vehicle as just as you normally would. However, if your vehicle sustains any damage during the loan period, you will be responsible for taking care of that damage to restore the value of the vehicle.
How to Get the Best Interest Rate
In most cases, the less you borrow against your car, the better the interest rate you’ll be able to get. It may be tempting to borrow as much as possible against your vehicle, but a more savvy way to borrow is to take out as little as you possibly can to secure the best interest rate.
Some lenders will only provide Logbook lenders will only approve loans on vehicles less than 10 years old. If you have an older vehicle, you’ll want to shop for lenders that specialise in Logbook loans for older vehicles in order to secure the best interest rate on your loan.
Who Owns the Vehicle?
It’s important to realize that when you take out a Logbook loan, the company making the loan effectively owns your vehicle. That means if you don’t make your loan payments per the requirements of your contract, the lender has the right to sell your vehicle to recover their money.
Since repossessing a vehicle can be an expensive undertaking, lenders will only sell your vehicle if they have exhausted all other options with you. If they do sell your vehicle, you’ll receive any money from the sale of the vehicle that exceeds the current loan balance.
If you know you will not be able to make a payment, be sure to contact the lender immediately. Most lenders will try to put together a payment plan to help you get back on track with your loan payments. In your loan agreement, these will be listed as “forbearance options”.