What is a logbook loan? What are the eligibility criteria and benefits of such loans?

Logbook loans are those loans which are issued against your car mortgage. This is relatively a new form of loan in the market. A person with a bad credit can also go for this loan provided he or she must own a car. So, literally, you get a loan when you mortgage your car. Now, to get this loan, you must own the car and it must not be purchased against another loan. If you have taken a loan to buy it, then it should be completely paid or almost paid.

Now let's see what the eligibility criteria to get such loans are:

  • 1. You must be 18 years old to apply for such loan. In some cases, the lenders want you to be 21 years of age.
  • 2. You must legally own your car or any other vehicle.
  • 3. There should not be any amount pending against a loan that you took to buy this car. At least, the payment must be almost done.
  • 4. You must be a UK resident.
  • 5. The issuing loan amount will be based on your car valuation. If your car is worth £1,500 then, your maximum granted loan amount will be £1,000. However, it will be at the discretion of the lenders and their valuation process.
  • 6. Only cars or vehicles purchased in 2002 or later are eligible to avail such loans.
  • Now let’s see what the benefits of such loans are.

  • These loans are approved within a day as you are mortgaging your car. So not much hassle of paperwork.
  • There is no credit check involved in such loans. So, people with bad credit can easily get a loan too.
  • As the loan is pledged, the rate of interest is low and the repayment period is relatively long such as 5-7 years.
  • During the loan tenure the car will remain in your possession. However, you get the full custody of it once the payment is fully settled.
  • You can choose your repayment method. Depending on your financial capacity, you can opt for monthly or weekly payment.
  • So, it’s a good deal to get a logbook loan when you need cash. The primary criteria to apply for such loan are to have a logbook of your car which is also known as Vehicle Registration Certificate. The certificate contains all the information of your car.