The term “bad credit” is
a very sensitive subject in the financial world. Lenders, in essence, view
individuals with a poor credit rating as a risk to the well-being of their
business and rarely offer them credit facilities. In fact, it is correct to say
that individuals with a poor credit history generally find it difficult getting
access to credit facilities or a mobile phone contract. For a long time, this
was the standard mode of operation so much so that those with a poor credit
rating felt like second class citizens.
There was hue and cry, distress, depression and a low
self-esteem among those with a poor credit score. Applying for a loan or a
phone contract became a nightmare of sorts and those with bad credit had to
contend with the all famous line “we are sorry but we can’t approve your
application at this time”. Well, this was the case before V5 loans became a
reality. V5 loans or
what is commonly known as logbook loans indeed changed the loan industry in
ways never seen before.
With logbook loans, individuals could now apply for emergency
loans without having to worry about the status of their credit score.
How logbook loans work
If you are thinking of
applying for a logbook loan for the very first time, you probably need more
information on how this amazing and lifesaving loan product works. For
starters, in order to qualify for a logbook loan, you need to be a legal owner
of a car, a van, a caravan, a motorcycle or even a lorry. The reason for this
is because logbook loans are secured using a car’s logbook. You sign off your
car logbook to the lender in exchange for the amount you receive as a loan.
When you do this, your car becomes the property of the lender for the duration
of the loan. However, you continue using the car as you make repayments.
Ordinarily, UK logbook loan lenders advance logbook loans up to
50% of the value of your car. To determine how much you are privy to when
applying for a logbook loan, it is essential that you provide your lender with
your car registration. They will then evaluate its worth and advice you accordingly. However,
there are a number of things you can do to ensure that you increase your
chances of approval or even the maximum amount you can apply for. For one, you
need to regularly service your car so that it’s in good condition. The
insurance and tax details of your car need to be up to date not to mention the
car needs to be free of any financial charges. The standard duration for a
logbook loan is 78 weeks which gives you the flexibility to plan your repayment
without feeling as if your back is against the wall.
Things to note
Getting approved for a loan facility despite your credit score status is
a beautiful thing. However, you need be cognisant of the fact that defaults
could put your car in jeopardy. In fact, you risk losing your car if you fall
way back in repayments. Logbook loan lenders have the legal right to repossess
and sell your car if you are unable to meet your logbook loan obligations. You
can also be sued especially if the proceeds from the sale of your car are not
sufficient to meet the principal amount together with the accrued interest!
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