Rules and guidelines you should know before taking logbook loans
Logbook loans are the types of loan where a borrower transfers its ownership of their cars or vehicles to the lender temporarily as a security for the loan. The borrower however, can have possession over their vehicles and can use them till the recovery of the loan is done. The borrower gets its ownership back on the full repayment of the loan. If failed, the lender has the full right to seize their vehicle without a prior court notice as per law.
How does it work?
Normally, you are allowed to take loan of 500-5000 euro depending on your vehicle’s worth. However, loan below half a value of your car is not allowed.
The borrower hands over the vehicle’s logbook or the vehicle registration document to the lender which acts as a proof of the borrower being the registered keeper of the vehicle.
Is the rules same for all countries?
No, it’s not. If you are to take out a logbook loan in Wales, England or Northern Ireland, you are supposed to sign ‘Bill of Sale’ which is registered and approved by high court, passes the ownership to your vehicle to the lender and states that the lender has full right to seize your vehicle if you fail to meet the full repayment of the loan.
‘Bill of Sale’ is not applicable in Scotland. They follow the ‘hire-purchase agreement’ or ‘conditional sale’ for the same which is applicable under the Consumer Credit Act 1974.
Things to be kept in mind!
Logbook loan sounds very tempting if you need a quick money access. But there are few things to be kept in mind.
- These are generally paid by cheque which might take quite a long time to clear.
- If paid by cash, you are mostly charge 4% interest of the loan.
- 78 weeks is the repayment time, failing which will lead to the seizure of your vehicle.
- Proper operation of the agreement is to be kept in mind.
- Be sure of your affordability. Mostly, only the interest charges are paid until the last month of your contract.
- You are expected to repay the full amount borrowed in the final month. So, assuring your affordability without taking a risk is all up to you.
- Interest charges are around 400% APR or even higher.
- You must be the legal owner of the vehicle.
- Your vehicle must value at least 500 euro or more.
- Your vehicle must not have any finance outstanding on it.
- If you fail to repay, the lender can sell your vehicle as you lose your ownership.
- After selling your vehicle, if the lender faces loss, you are fully responsible for the shortfall and repayment is to be done by you.
Above given is the information you needed to know to take a logbook loan. You can still get help from ‘Night Sky Loans’ for loan issues. Just be in touch with us for further help and attractive loan offers.