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For many people the recent economic downturn has hit them hard where it matters most, in their pockets. There are more and more people are having trouble paying for their food, utility bills and credit card payments.
For those people who have an excellent credit rating, then all they need to do is to ask their bank for a loan or an overdraft extension. However, for those people whose credit history is less than sparkling, then securing a loan or overdraft increase can be difficult. That is why more people than ever before are turning to logbook loans to help them out of their tough financial situation.
Credit Options For Car Owners
Car owners do not always realize that they have an asset that they can make use of in order to obtain hassle free credit, and once more they are a good way to boost a low credit score. Logbook loans are similar to payday loans in that they do not typically require a credit check; however, instead of being based on your income, they are secured against your vehicle.
A car logbook is a document that holds the details of the cars important information, such as the vehicle registration and VIN numbers, they also have up-to-date information on the owner, their name and address etc, and this means that they are an up-to-date record. The amount of the loan that can be secured against a car logbook is dependent on the age and condition of the vehicle and payments typically range from the hundreds to the thousands.
Who Can Get A Logbook Loan?
Similar to payday loans, a logbook loan can be very quick to acquire and can even be done over the internet. There are going to be a few criteria that need to be fulfilled before the logbook loan application can be completed and processed.
Firstly, there should be no outstanding finance on the vehicle, so it needs to be owned outright by the person who is asking for the logbook loan. Also the tax and insurance on the vehicle needs to be paid up with no outstanding money owning.
One of the best things about a logbook loan is that, even though you are using your car as collateral, you still get to keep it and drive it around. All the company providing the logbook needs, is the actual logbook itself, not the car.
Repayments are worked out depending on your financial situation and how much you have borrowed, so the longer you take to repay the loan the smaller your monthly payments will be. Perversely if you opt for a shorter period of time to repay the loan, your monthly payments will be a lot higher but you will pay it off sooner.
Improving Your Credit Score
If you are one of the many people who have a credit score that is on the low side, and you wish to improve your credit score, then logbook loans can actually help you to improve your credit rating.
Even though, like payday loans, logbook loans do not require you to have a squeaky clean credit report, they can report your good repayment history on a logbook loan to credit reference agencies. This will help to raise your credit score, plus, if you did default on a logbook loan this will not be reported to credit reference agencies either. However, be warned, not paying your logbook loan will result in you having your car repossessed and you could still end up with solicitor and court fees for any outstanding money owed.
A bad credit score need not exclude you from borrowing the money you need to make ends meet in a difficuly financial time. In fact, when used responsibly, short term loans like logbook loans can actually be used to improve your credit score although this is a long process rather than a quick fix.
Hugh Tyzack is both the managing director and founder of loansforbad-credit.co.uk, a company specialising in logbook loans UK and other lending options fot those with bad credit. There are more details available on his website or you can follow Hugh on Twitter @badcreditloans8 or on Google+.