Are you considering taking out a logbook loan for older cars?
Logbook loan providers often specify that a car must be under ten years old to meet their lending criteria. However many lenders will consider your vehicle even if it was purchased before 2007.
Instead of focusing on its age, they will look at its trade value, condition and mileage. Also, they will consider whether you are able to afford the repayments on the loan.
In this article, Cashlady looks at logbook loans for older cars and where you can find one.
Taking out a logbook loan
Logbook loans provide a way to borrow money using your vehicle as security. This type of loan can be useful if you have failed to access finance from a mainstream lender. Or if you need to borrow a larger amount than is available through a short term loan, such a payday loan.
The repayment period is usually much longer than with a payday loan. In some cases, it can be up to four years. Depending on your financial circumstances and the value of your car, you may be approved to borrow between £500 and £50,000.
The interest on a logbook loan is typically much higher than with mainstream finance. Yet, the rates are often lower than with a payday loan, beginning at around 99%.
A key feature of a logbook loan is that the loan provider usually takes temporary ownership of your car for the duration of the loan. Although you’ll still be allowed to drive it as long as you keep up with your repayments.
If you fail to keep to the credit agreement then the lender may take your car and sell it at auction to recoup the money that you owe them. You are typically required to make up the shortfall if they don’t receive the full amount that you owe.
A logbook loan can be a risky way to borrow money. Before signing up for one we recommend that you take the time to familiarise yourself with the application process and what to look out for in a lender.
You can read in more detail about how logbook loans work here.
Why age matters
When applying for a logbook loan, the age of your car is important. Because, generally, older cars are subject to more wear and tear and worth less than younger cars.
The trade value of your car helps to determine how much you can borrow. Which in some cases is up to 70% of its value or more, depending on your lender and loan affordability.
The lender needs to be sure that the value you borrow is covered by the value of the car. That is, in the event, they are required to repossess it and sell it to get their money back.
Typically, logbook loan providers ask that your car is:
· Worth at least £500 or £1000
· Under ten years old
· Free from finance or nearing the end of the finance agreement
· Fully taxed, insured and has an up to date MOT
· Kept in good condition for the duration of the logbook loan
Logbook loans for older cars
Not all older cars are worth less than younger ones and many logbook loan providers will consider your vehicle, whatever its age. So long as it has been kept in a reasonable condition.
Older cars that have been kept in excellent condition or don’t have many miles on the clock may have a high trade value. Particularly along with classic cars and sports cars, which will usually be reviewed on a case by case basis.
When considering your older car for a logbook loan, the lender will look at:
The condition of your older car
If your car is older then the loan provider will expect it to be in a reasonable, undamaged condition. Ideally, they also like to see a full service history to prove that it is in good condition and has been well serviced and maintained.
The mileage on your older car
Older cars will typically have a higher mileage, which means that regular maintenance is essential.
A full service history or receipts from garages etc. help prove that the car has been properly cared for. Without these, the lower the mileage on your car the better, especially if it is over 10 years old.
Should you take out a logbook loan on your older car?
The main consideration when taking out a logbook loan is whether you can afford it. Logbook loan lenders are regulated by the Financial Conduct Authority (FCA) and as such, they need to be sure that you can afford the repayments.
You should also take the necessary steps to calculate the repayments carefully. Consider whether you are willing to risk losing your car should you fail to keep to your credit agreement.
Where to find logbook loans for older cars
Logbook loans are available both locally, on the high street through stores such as cash converters. And nationally, through online loan providers. These providers allow you to begin the application process on their website and then complete it over the telephone.
The application process is usually followed up by a visit from a representative from the loan provider, who will arrange to meet at your home or work. They will go through the paperwork with you and inspect your car.
Below we list some of the main online logbook loan providers for older cars.
Loan Term: 18 months to 48 months
Loan Amount: £500 – £25,000
Representative APR: 99.99%
Loan Term: 12 months – 36 months
Loan Amount: £500 – £50,000
Representative APR: 190.3 %
Loan Term: 6 months to 36 months
Loan Amount: £250 -£50,000
Representative APR: 450.5%
It is a common misconception that it is difficult to get logbook loans for older cars. However many loan providers will consider your older car, depending on a set criteria.
The important things to take into account are the mileage of your older car and its current condition. However whether you can afford to easily make repayments, should be your main focus.