What Are The Eligibility Criteria For A Logbook Loan?

Logbook loans provide an opportunity to access quick cash by collateralizing your car. Unlike traditional loans that often require extensive preapproval, logbook loans are straightforward. 

Besides, many lenders won’t verify your credit score before prequalifying you for a logbook loan. That makes the loan application process super easy and the approval time remarkably fast. 

Other noteworthy perks of logbook loans include competitive interest rates and reasonable repayment plans. 

However, merely owning a car doesn't qualify you for a logbook loan. Several other conditions apply. 

In this post, we examine the eligibility criteria for obtaining logbook financing. 

Finding the Perfect Lender

Before we delve into the minimum qualifications for obtaining a logbook loan, it’s imperative to begin by identifying a reputable lender. 

First, seek out an experienced and well-reputed logbook lender. 

Sample online reviews for insightful feedback on the lender’s products and services. And while you’re at it, pay keen attention to the aspects that most reviewers liked or disliked about the company. 

For instance, does the lender take forever to process loan applications? Do they impose hidden fees? Is their customer support responsive and professional? 

The funding amount is another critical element when looking for a logbook loan. 

While the amount you can borrow typically depends on your vehicle’s worth, many lenders will also consider other factors, like your ability to repay the loan. Look out for companies that approve your asking amount or propose a figure within the ballpark. 

Lastly, consider the interest rates and repayment periods while scouting for a logbook lender. If possible, choose a company that accepts fast loan repayments without imposing hefty penalties.

Photo Credit: Pixabay.com

Eligibility Criteria for Securing Logbook Loans 

1. Age of Majority

Logbook financing is strictly available to legal adults. That means you must have attained the age of majority (18 years) to qualify for these loans. 

Fortunately, you can expense a logbook loan however you please. You can utilize the funds to purchase business inventory, settle your children’s outstanding college fees, and even sort out medical emergencies in the family. 

However, remember to utilize a logbook loan if you need it. Do not use the funds to finance a vacation or procure personal assets, such as household appliances. 

2. Proof of Identification

The easiest way for logbook lenders to confirm your age is by asking for a government-issued identification (ID) card or passport. 

But these documents don’t just verify that you’re a legal adult. They also prove that you’re who you claim to be. 

Most lenders will require proof of identification after receiving your logbook loan application. It helps them confirm your identity and double-check that the names match all submitted documents. 

Producing a driver's license is critical to confirming your identity since you’re applying for a logbook loan.

3. Proof of Vehicle Ownership 

Did you acquire your current vehicle as an inheritance from your parents or as a gift on your 15th birthday? If yes, a transfer of ownership is necessary to confer full ownership rights to you. 

Without a proper ownership transfer, the vehicle is still registered under the original owner. That means you cannot put it up as collateral while applying for a logbook loan. 

Your lender will ask you to produce the logbook, also known as V5, as evidence that you’re the vehicle’s registered owner. More importantly, they’ll need to ensure the car has no (or minimal) outstanding financial obligations.

4. Proof of Vehicle Roadworthiness

A vehicle’s roadworthiness is pegged on several aspects. 

First, the car must be insured and have valid proof to show it. 

The vehicle must also possess a valid MOT. UK laws require most vehicles over three years old to undergo annual MOT tests to determine their safety and roadworthiness. The test also assesses other critical aspects, such as exhaust emissions. 

Finally, a roadworthy vehicle must be up to date on relevant taxes. Tax rates are levied depending on the car’s make and model and whether it’s used for personal or commercial purposes.

Photo Credit: Pixabay.com

5. Proof of Address

Nearly all countries require borrowers to be legal residents before applying for logbook loans (or other credit facilities in general). The same applies to the UK. 

To prove you’re a legal resident, you’ll need to show proof of address through bank statements and utility bills. 

These documents should preferably be dated within the last three months from when you submitted your logbook loan application.

6. Proof of Income

Before advancing credit facilities to you, lenders must ensure you’re a low-risk borrower. 

While logbook loans are collateralized with vehicles, most lenders still require proof of regular income, such as bank statements and payslips. This confirms that you can repay the loans within the stated terms. 

Note that you must not necessarily generate income in the UK. However, you’ll need to have a UK bank account. 

If you’re unemployed, you may provide proof of expected pensions, dividends, inheritance, and other financial benefits.

Photo Credit: Pixabay.com

Wrap Up

While many lenders don’t consider credit score a major obstacle to advancing logbook financing, checking your credit rating before applying for a logbook loan is important. 

Even with high-value collateral, your credit rating score can impact other lending terms. Those include the lending amount, interest rates, and repayment period. 

The good news is that you can find a logbook lender despite your credit score. However, remember to read their lending terms carefully and ensure they align with your expectations.