I can relate to how you you felt trying to get a new loan but you couldn’t because you still have outstanding finances on your vehicle. And I believe that’s the reason why you are here asking if you can get a logbook loan with outstanding finance and you’re also trying to understand if companies like equity offer such loans am I right? I guess I am.
So do not panic Amigo a lot of persons have faced this issue and were able to come out of it so your case won’t be different this time around.
What Is a Logbook Loan?
Have you not heard of some people who use their vehicle as collateral while getting a loan that is what a logbook loan is all about. The rule is simple you gently hand over your car’s logbook which is also known as the vehicle registration certificate (v5) to whosoever is lending money to you in order to get a loan from them.
Wait don’t shout yet because you will still go home with your car it will still stay with you as long as you continue to make your payment as at when due. However, an opportunity to lose your car is when you fail to make your payments then it’s time to bid your car farewell because the lender is coming to possess it.
Understanding Outstanding Finance
Before we hurrily rush into the details of the article let us first of all understand what outstanding finance means. Now let me break it down for you to understand for instance you purchased a vehicle through financing such as a hire purchase or let’s say, a personal contract purchase.
Now technically speaking the vehicle is yet to become yours because you have not completed the loan. so outstanding finance refers to any remaining payments that you still owe under that agreement.
Can You Get a Logbook Loan with Outstanding Finance?
In a normal circumstance, you can get a guaranteed Logbook Loan with Outstanding Finance even if your vehicle still has any outstanding finance left. But listen this has a lot of challenges that follow it because lenders will have to assess a lot of factors before they think of considering your loan.
Most lenders might outrightly say no to your offer while some might give you some specific conditions which you will work that might not be easy for you.
How Logbook Loans Work with Outstanding Finance
Applying for a logbook loan is simply giving the lender the legal right to place a charge on your vehicle. I hope you understand that with this they can easily repossess your car if peradventure you default on the loan given to you. But in a case where your car already has outstanding finance, the first lender (the one who provided the car loan) can also have a charge on the vehicle. In such cases, the new lender must work around the existing finance agreement. so this is why a lot of lenders would love to see you pay off your current finance provider using the funds from the logbook.
Benefits of Logbook Loans
If you don’t have a perfect credit score yet then logbook loans are your surest path to follow. The reasons are that the loan is secured against your vehicle and also the process it takes to approve it is always swift and they do not rely on your credit history. Finally, you can still be using your vehicle provided you continue your loan repayment.
Risks of Getting a Logbook Loan with Outstanding Finance
Yes, truly there are some risks associated with getting a logbook loan with outstanding finance.
- Owing two lenders at once your initial finance company and the logbook company
This will seriously cause strain on your financial life and can equally increase many chances of losing your vehicle when you fail to make payments to both of them
Equity and Logbook Loans
Equity has been known for a long time for its services in offering financial products which include mortgages and personal loans. but today a lot of people want to know if they offer logbook loans or not let’s find out below.
Does Equity Offer Logbook Loans?
As of the time of writing this article on the 18th day of October 2024, Equity is yet to offer logbook loans. They are majorly based on traditional loan products such as secured personal loans and equity release. So I will advise you to look elsewhere you can try out the NCBA logbook loan for this type of loan.
How to Apply for a Logbook Loan with Outstanding Finance
Here’s a quick guide to help you apply: If you’ve fully made up your mind and decided that a logbook loan is the right option for you
- Find a reputable lender: Make sure the lender you choose accepts applications from those with outstanding finances.
- Gather your documents: You’ll need your vehicle’s logbook, proof of identity, proof of income, and documents related to your current finance agreement.
- Apply online or in-person: Most logbook loan lenders allow you to apply through their website.
- Get approval: The lender will evaluate your vehicle and finance status before offering you a loan.
- Sign the agreement: If approved, you’ll sign a loan agreement and hand over your vehicle’s logbook.
Tips for Managing a Logbook Loan with Outstanding Finance
To avoid complications, it’s essential to:
- Ensure that the logbook loan amount is sufficient to cover your existing finances.
- Make a clear repayment plan to avoid defaulting on both the outstanding finance and the logbook loan.
- Stay in regular communication with both lenders to avoid confusion.
What Happens If You Can’t Repay the Logbook Loan?
If you’re unable to keep up with payments, then kindly bid farewell to your vehicle. This could also leave you liable for any remaining balance on your outstanding finances. It’s crucial to stay ahead of payments or negotiate with your lenders if you face difficulties. A pro tip I’ll advise you to go for a cheaper logbook loan to avoid unnecessary problems.
Alternatives to Logbook Loans
If a logbook loan doesn’t seem right for you, there are alternatives such as:
- Personal loans: Unsecured loans that don’t require your vehicle as collateral.
- Credit unions: Often provide lower-interest loans with flexible repayment terms.
- Debt consolidation loans: Combine multiple debts into one manageable payment.
Conclusion
As we said in the article body it is possible that you can get a logbook loan with an outstanding finance but yet the process can be complex. so I suggest you sit down and think about it weigh the benefits and also the risks involved so that you can be fully sure that you can manage all that it will throw your way. Terms and conditions are very important, before you enter into any agreement read them to understand.
FAQs
Can I keep my car if I get a logbook loan?
Yes, you can keep and use your car as long as you make the necessary loan repayments.
What happens if my vehicle is repossessed?
The lender will sell the car to recover the outstanding loan amount. You may still owe the remaining balance if the sale doesn’t cover the full debt.
Does having bad credit affect my chances of getting a logbook loan?
you can get guaranteed Logbook loans that are generally accessible to those with bad credit, as the loan is secured against your vehicle.
Can I get a logbook loan if my car is on a PCP agreement?
It depends on the lender, but many require that your PCP agreement be fully paid off before granting a logbook loan.
Are there any alternatives to logbook loans?
Yes, alternatives include personal loans, credit unions, and debt consolidation loans.
My academic background in financial management, economic principles, and market analysis provides a solid foundation for understanding the intricacies of the loan market.
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