The concept of logbook loans has now taken root in the UK market as compared to when they were first introduced. At the time, there were doubts as to whether this model would work especially with the promise that credit checks were not a deciding factor. However, the spiralling popularity of logbook loans has indeed put the naysayers to shame. Those who held the view that V5 loans would be a thing of the past within a couple of months had to eat humble pie.
What is a logbook loan?
Otherwise known as a V5 loan, a logbook loan is essentially a special type of secured loan where a person’s V5 document is used as security for the loan. In essence, what typically happens is that the borrower signs off their car to the lender for the duration of the loan. The car becomes the property of the lender for the whole duration of the loan until the amount due is fully repaid. However, the physical possession of the car remains with the borrower who can use it as they repay the loan. What the borrower surrenders to the lender is the car logbook.
Requirements to be eligible for a logbook loan
As is with any other loan instruments, UK logbook loan lenders require applicants to meet certain qualifications as well as submit certain documents before they can be considered for a V5 loan. The first on the list is the requirement to be a citizen of the United Kingdom. You need to show proof that you reside in the UK, proof that you are not a minor (must be 18 years and above) and show proof that you are in employment (copies of payslips or bank statements would suffice).
That is not all, you need to furnish the lender with a copy of your identity card, a ministry of transport (MOT) certificate, and proof that your car is fully insured not forgetting the car tax details. The car you set up as security should be one that you legally own. What this specifically means is that you cannot produce as security a car that belongs to your neighbour, your friend, colleagues at work, cousin or even a sibling.
Do you have to worry about credit checks?
For a long time, credit checks have stood in the way of individuals seeking to get a loan. Well, logbook loans made that a thing of the past and it is no wonder they are popular with individuals whose credit rating has taken a nosedive. So no, you don’t have to worry about credit checks when applying for a logbook loan.
Instances when you could be denied a logbook loan
While it is a foregone conclusion that your credit score plays no role in the decision to reject or approve your application, there are instances when UK logbook loan lenders might not consider or out rightly reject your application. The most obvious reason is of course not meeting the requirements set forth. Secondly, wilful submission of wrongful information is fertile ground for rejection. Thirdly, a car that has been on the road for a period longer than 10 years will not be accepted as collateral and therefore, will lead to rejection of your application. On the same note, a car that is not serviced regularly or is simply unroadworthy would not be accepted as security and lead to your application being thrown out.
As you will found out right here, logbook loan applications are open to everyone and all you need to do is ensure you choose the right lender in the UK. You can indeed get the money you need within a couple of hours using your car as security without worrying about your credit rating status.