Logbook loans are generally a quick and easy way of obtaining quick cash. You would normally be able to apply for a loan for up to half the current book value of your vehicle. The loan provider would be given your vehicle’s logbook or vehicle registration documents. The vehicle would need to be in your name in order for you to take a logbook loan against it.
Most agents will require you to sign a bill of sale and a credit agreement. This basically gives ownership of the vehicle to the credit provider. If the bill of sale is registered, the lender can repossess your car if your loan payments are not met. You are allowed to use your vehicle and the sale is of a temporary nature provided you pay your instalments on the loan timeously. Once the loan has been paid back in full, including interest charges, the sale agreement becomes null and void and you are given the logbook/registration documents back, and your vehicle is once again totally yours.
These loans often have longer repayment terms and allow for larger personal loans on high value vehicles, but the interest costs can also be fairly high. Ensure that you have read and understood the agreement before signing as the terms and conditions can differ from one lender to the next.
There is very little consumer protection on these types of loans and you could lose your vehicle if the repayments are not met. Ensure that you are using a reputable lending company and that your vehicle has been independently valued. Request a monthly statement of account to ensure you are staying on top of your payments and keep track of your instalments and how much is still owed.
Ensure you only use a reputable company if you are looking for a logbook loan and look for a good interest rate over the repayment term. If you are unable to pay your loan, your vehicle could be seized and sold to recover the cost of the loan. If the sale value is less than the amount outstanding on your loan, you would still be liable for the balance of the outstanding loan.
There are a number of other options for credit and a logbook loan should be looked at only in an emergency situation where a large amount of money would be needed in a short period of time as this type of loan is expensive and can be risky if you are unable to repay the loan timeously.