Last Updated: 27/04/2019
Emergencies can lead to financial ruin, an emergency financial situation can happen quickly. One form of obtaining help is securing a loan through a cash generator logbook lender.
What are Logbook Loans?
Logbook loans in Kenya are a form of emergency financing, or the borrowing against a vehicle to secure financing. What you’re doing is taking a loan out against an automobile that you own.
The lender will receive your vehicle’s logbook, and you’ll receive money.
A logbook is a form of security. If you fail to satisfy your payments as per your loan, the lender may be able to take possession of your vehicle. When your loan repayments are fully satisfied, you will have your logbook returned.
It’s a simple loan option, and since you’re supplying a form of collateral, you’ll be able to get a loan with bumps and bruises on your credit.
The good news is that you’re still able to use your vehicle.
A lot of people have car trouble, take out a loan to make repairs to their vehicle and continue driving their vehicle.
Loan Amount Limitations
Lenders have their own limits and restrictions on the amount of the loan that will be accepted. A general rule of thumb is that the lender will provide a loan that is no more than the value of the vehicle.
You may receive a loan for the amount that the vehicle is worth, or you may receive less than the vehicle’s value.
Most companies will keep their risks low while keeping your risks high. Some lenders will do this by capping the amount that you may be eligible to receive.
Reputable lenders will require that the vehicle be valued prior to applying for a loan.
If the lender doesn’t have the vehicle valued, you have to question the lender’s credibility. Every lender needs to be able to understand the current value of the vehicle before taking on risk.
Annual percentage rates, or APRs, are significant when taking out a logbook loan. You may have to pay as much as 400% APR, and this can mean a significant amount more is being paid back over the actual loan amount over a period of a year and a half.
Higher interest rates are a major concern, so make sure that you look at the interest rates prior to singing your contract.
There is a lack of consumer protection when you sign a Logbook loan agreement, so this means that you have much less protections as a borrower than with a hire purchase agreement.
A few things that you’ll want to consider before taking out this loan option:
- You may need to pay an extra fee if you pay the loan back early.
- You may need to make payments weekly, so this may be difficult for some borrowers.
- It’s best to pay back the loan fast due to the higher interest rates.
The entire basis behind a logbook loan is that the lender can seize your vehicle if you fail to pay your loan. If you happen to miss one payment, it’s unlikely that the lender will seize the vehicle. You’ll have some form of a grace period before a bailiff is hired to take possession of the vehicle.
Ignoring the issue is never a good idea. A default notice will be sent to you that will allow a 14-day period wherein you should respond to the notice. The response is required if you hope to retain your vehicle.
And when your vehicle is sold, if it is seized, you will be required to pay back any excess that may have been left after the vehicle’s sale.
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