Do You Qualify for a Logbook Loan?
When you need money and you need it soon, a logbook loan can be your saving grace. You can borrow money based on the value of your car by using it as security. Before you go through the trouble of enquiring about a loan, take a look at the following guidelines for qualification. Remember, though: every lender is different and they often have their own unique requirements.
Your Personal Information
In order to be considered for a v5 loan, you must be a permanent resident of the United Kingdom and at least 18 years of age. You can only take out a loan on your own car; in other words, the vehicle’s logbook must be in your name. Although most lenders prefer that you have no outstanding finance on your car, some will work with you if you have very little left to pay before you own it outright. If all of these requirements fit your situation, you may be able to qualify.
Employment and Income
Before a lender will provide you with a loan against your car, you must be able to prove your ability to pay it back. Most of the time, lenders will require monthly repayment via an automatic draft from your checking or savings account. This means that you’ll need to be employed, and your income needs to be high enough to comfortably repay the loan each month. As an example, if you are looking for logbook loans in Nottingham, your lender will likely ask you to verify your employment and income for these very reasons. If you are self-employed, receiving pension payments, or receiving government benefits, you may still qualify through certain lenders.
Car Type and Value
It’s important to remember that logbook loans typically only apply to cars, so you can’t borrow against vehicles like motorcycles, RVs, boats, or vans. Your lender will help you determine the overall value of your car based on criteria like age, mileage, and condition, and you could be offered a loan worth up to 80% of your car’s value. The age of your car does not matter as long as it has value. Minimum loan amounts are £250 and maximum loan amounts are £50,000. Remember that different lenders may offer you different loan amounts based on their unique requirements and guidelines, too.
Although it is relatively easy to qualify for a car logbook loan, there are some things that may prevent you from receiving that loan. These include:
- Significant credit issues. Although most v5 lenders are a bit more relaxed when it comes to extending credit since these loans are secured by the value in your car, those who have seriously poor credit may not always qualify.
- Low car value. Even if your car runs and drives, lenders will base the size of your loan off the value of your car. If it has been wrecked, is in poor condition, or has very high mileage, you may not qualify.
- Short employment time. If you just started a new job, your lender may not feel comfortable in providing you with a loan. Aim for at least three months with a new employer before you enquire, but remember that lenders prefer at least six to 12 months of continuous employment with the same company.
- Low income. Even if you own your car and it has relatively high value, lenders may not give you a loan if your income is not enough to comfortably repay it.
All lenders have different guidelines and requirements when it comes to the extension of credit, so be sure that you take the time to review any terms and conditions presented to you if you are offered a loan. Remember that logbook loans are never guaranteed, no matter how long you’ve been employed, how much money you make, or what type of car you drive.