How Do Logbook Loans Work?
Alongside signing a credit agreement the customer is asked to sign a “Bill of Sale” document that will be registered with the High Court. We recently provided some info surrounding the total number of Logbook Loans Issued Through the High Court. If repayment problems are faced then they could repossess the car and they will not need a court order to do this. They tend to offer cash at the region of 70% of the vehicle’s trade value. It’s pretty much a win-win situation for the lender. Obviously, a repossession would be the last resort for them and this would attach debt recovery fees on top that don’t come cheap.
Most companies tend to require the car to be less than 10 years old, although there are exceptions, particularly with prestige models. How logbook loans work is quite savvy on the lender’s side through the security they attain and the generous profits obtained through the expensive rates of interest. They can as you can imagine take on more high risk clients and this is clear when you consider that this is the only subprime sector that includes a wide range of firms that undertake No Credit Checks. Very poor credit is not an issue, but as responsible lenders they would have to see that you can afford to make the repayments.
The CCTA is the main trade association associated within this subprime niche. Most firms use them and it is important to see this since they have a Bill of Sale Code of Practice in place. A Bill of Sale agreement is recognised by law in England, Northern Ireland and in Wales. It is not recognised in Scotland, but the logbook lenders in Scotland instead tend to use a hire purchase agreement instead. If one of these lenders is willing to take you on and no one else will, then just make sure that you do borrow a cash sum that you are fully confident that you can manage with ease.
