Logbook loans can be said to be the transfer of van, car, or motorcycle from the original owner to a logbook lender as a form of security for a loan. On fulfilling the terms of the agreement of the loan, the loaner gives back the vehicle to the original owner, but until then the loaner has the right to use the vehicle till the payment is completed then the original owner can always have it back. To get started with the logbook loan process, a V5C registration document or logbook must be made available, but this process doesn’t have any legal backing, just mere symbolic gesture.
But in a case whereby the borrower fails to pay up, the lender has the sole right to seize and sell off the vehicle to redeem his loan under an English low, a logbook lender has the right to take ownership of the vehicle even without the knowledge of the court. There are different laws that regulate logbook loans, due similar but differs. For example, in countries like Wales, England, and North Ireland, the law is regulated by Bills of Sales Act 1878 as well as the Bill of Sales Act (1878) Amendment Act 1882. You have to understand that the loaner has the right to be using the vehicle until the borrower fulfills the agreement by paying back the loan.
Factors to consider Before going for a Logbook Loan
There are important factors to consider before you decide to go for a logbook loan, the major ones include:
• You have to consider the Annual Percentage Rate (APR). This is because sometimes the APR can be high (though sometimes low), but knowing the APR makes you understand the best time to pay off the loan when it is low we advise you pay off as soon as you can.
• Those going for this type of loan must have to understand that early payment of the loan may attract extra charges especially when it is more than 12 month period.
• Most of the logbook loan lenders may ask their borrowers for weekly payment, this is because some of them don’t Direct Deposits so sometimes they find it difficult to keep a record of how much owned by the debtors.
• While on the logbook loan package, if you happen to miss your payment records, you can always ask your way can easily see the amount you owe.
• You have to bear in mind that how much you are eligible to borrow depends on the value of the vehicle meant to be used. The loaner will also demand to know.
What Happens when you can’t pay Back your Logbook Loan
It is quite obvious what happens when a borrower fails to pay up back his loan to the loaner. An average logbook loaner has every right to apply bailiff to acquire the said vehicle if the borrower fails to meet the repayment deadline. Legally, the loaner is meant to send the borrower a notice demanding that he/she respond within 14 days. That way, the borrower will be very much aware that the due date has come, that way they will start making provisions to may up. At this stage of the loan, it is recommended that you get debt advice from a professional to know and examine your options; don’t just wave it off.
Borrowers will have to note that logbook loaners don’t need any court order to take over the vehicle should they fail to pay up their loan. But if in a situation whereby the amount of money owed by the borrower wasn’t realized even after selling the vehicle, the borrower will still have to pay up for the shortfall. In a situation where the borrower cannot pay up the shortfall, the logbook loaner has every right to drag him to court to that effect.
Legally, the logbook loans are expected to run up to 78 weeks, but if the borrower happens to have the money before the due date, they can go ahead to pay the loaner (if they can afford the extra fee for repaying after the agreed date). Lastly, we must advise borrowers to try and read the terms of the agreement of the logbook loan before they going into it.