If you want to change your car for a newer model, but don't have the ready cash, taking out a loan can be an option. However, if you don't have a perfect credit history, many lenders won't consider you. So, what can you do? Well, help may be at hand in the form of a logbook loan. Read on for more information.
What are logbook loans?
Simply put, a logbook loan is a loan that is secured on your existing car, up to its current market value.
Logbook loans are only available over the short term, because of the depreciation factor of your vehicle. This can make monthly repayments a little higher than they would be if you were to borrow the money over a longer period from a bank. However, interest rates on secured, short term loans like these are generally lower, meaning that the cost will work out pretty much even in the long term.
You don't have to spend all of the money you receive as a loan on a new car. For example, you could use some of the funds to pay off a credit card balance, saving you more money each month.
How can you get a logbook loan?
The best way to source a lender who offers logbook loans is to search online or to ask your local financial advisor if they can recommend anyone who provides this kind of loan.
To be considered for a logbook loan you must be able to prove that you are the outright owner of a car that's fairly new and in good condition. If your car is a hire purchase vehicle or already has finance secured on it, you won't be able to apply for a logbook loan.
You must also be in full or part-time permanent employment, and you will be asked to provide proof of your income and outgoings. It's very important that you are able to comfortably make the loan repayments each month. If you fail to make the repayments, the lender will be legally entitled to seize your car and sell it to recoup their losses.
In conclusion
If you have a less than perfect credit history, taking out a logbook loan might be a good way of raising sufficient finance to buy a newer or more suitable vehicle. If you're unsure about how to raise finance for your new car, have a chat with your local financial advisor for more information about options for car loans.
Share22 July 2016
As the old saying goes, "you have to spend money to make money", and in this blog, I am going to help you see how and when that platitude applies. Hi, my name is Penny, and I love to write. My second favourite thing is to think and strategise about money and finance. In this blog, I am going to explain finance in ways that I hope are new and interesting to you. I studied accounting at uni but verged away from that to start my own consulting firm. I work from home, and I am bringing you this blog from my home office. Thank you for reading!