Secured Loans And Logbook Loans Explained

The credit card statements are now starting to rear their ugly heads. Reminding us all that we spent far too much money over the festive period, and no doubt struggling to find a solution to our ever increasing debt. People who are elliglible may consider the benefits of debt consolidation especially if they have some collateral that can be offered to the lender.

So What Is A Secured Loan?

A secured loan is a loan that is secured on some collateral usually your home. This means that if you do not repay the loan the lender can force the sale of the collateral that you used to recoup their money.

To qualify for a secured home loan you will need;

1.To own your home: you must be a homeowner to qualify for a secured loan.

2.Equity in your property: the lenders will lend no more than 85% of the value of your home including your new loan and your outstanding mortgage if you have a good credit profile. if your credit record is blemished in any way then they will lend less.

3.To have a credit check: the lenders will need to carry out a credit check before they approve your loan.

4.Provable income: the lenders will need to see evidence of your income i.e. payslips or bank statements. The self-employed will need to show their accounts covering the last 3 years trading, there will also be restrictions with regards to the amount of equity they will need i.e. The self-employed will need more equity in their property to qualify.

5.A mortgage: In order to qualify for a secured loan you will need to have a mortgage on your property, and the repayments must be up to date. If you do not have a mortgage you are only able to arrange finance secured on your property for sums of more than £25,000 and it must be in the form of a mortgage by law.

6.A valuation: the lender will normally insist on some sort of valuation of your property at their expense.

7.Consent: sometimes your mortgage lender will need to give consent to a second charge being placed on your home.

To qualify for a secured car loan (logbook loan) you will need:

1.To own you car: you must be the registered owner of the car and it must be free of finance. The car must also usually be less than ten years old.

2.Value in the car: the car must be worth enough money to justify the loan; the lenders will inspect the vehicle prior to paying out the loan.

3.To be at least 18: it is illegal to offer a loan to anybody under the age of 18.

4.To be resident in the UK: logbook loans are only available to people who live in England and Wales.

5.Provable income: the lender will need to see evidence that you can afford the repayments. Your income can be derived from any source even benefits.

6.To be prepared to give up your logbook (V5 document): the lender will keep hold of your logbook until you repay the loan in full. You should always keep up with the repaymants as your car may be sold if you do not.

In Summary.

You should always be certain that you can keep up with the repayments before taking out a secured loan of any kind. Failure to do so will potentially lead to your collateral being sold to recover the lenders money. As a result you may have your car or home repossessed if you do not make regular repayments.