Every business experiences financial doldrums occasionally, when cash flow slumps dramatically while expenses remain constant. During such moments, obtaining a loan might be the best strategy to stay afloat.
Logbook loans provide one of the fastest ways to obtain funds.
Unlike conventional business financing options, logbook loans are remarkably accessible and offer flexible repayment plans. Besides, these credit facilities are available to automobile-owning businesses and private motor vehicle owners.
In this post, we explore why more drivers are leveraging logbook loans to obtain quick cash.
1. Near-Instant Accessibility
One of the standout features of logbook financing is its quick accessibility. That is largely because it’s a secured loan, with your vehicle acting as collateral.
Unlike other business loan types, a logbook loan can be obtained within twenty-four hours of submitting an application. One day is enough time for most lenders to validate the submitted documents and release the funding.
Even better, you can accelerate the process by applying online.
Most logbook lenders maintain intuitive websites with customizable forms and templates, which take the hassles out of the loan application.
2. Variable Interest Rates
Conservative estimates by the Financial Conduct Authority (FCA) put the average annual percentage rate (APR) for logbook loans at a whopping 400%. That’s significantly higher than many secured loans, whose APRs can be as low as 10%.
However, logbook loans have one of the most variable interest rates of all business loans. The trick is to research lenders wisely.
While some lending firms levy astronomical interest rates, it’s not impossible to find those charging double-digit rates.
Note that the lending rates will also depend on other aspects, such as the required loan amount and repayment period.
3. Flexible Repayment Period
When your business is cash-strapped and you’ve opted to procure a loan, you deserve a credit facility with a reasonable repayment period. That’s another area where logbook loans excel over many other types of business financing.
In the UK and most other jurisdictions, the repayment period for logbook loans ranges from 12 to 36 months.
Depending on your lender and the borrowed amount, you may have up to 60 months to service the loan.
Most logbook loans come with an early repayment option too. However, ensure you read the fine print to establish that there are no penalties for early repayments.
4. Quick Fix for Unexpected Expenses
Expenses have a way of cropping up when least expected.
Whether it’s a sudden increase in school fees or a breakdown of business equipment, you can address these unforeseen expenses effectively through logbook financing.
For businesses, logbook loans can help purchase more inventory, repair malfunctioning machinery, and fund an urgent marketing campaign. You could also utilize the funds to offset accounts receivable while waiting for cash flow to stabilize.
Meanwhile, personal motorists can use logbook loans to pay school fees or fund urgent home renovations.
5. Solution for Capital-Intensive Purchases
Not all expenditures are unforeseen. Some are well anticipated, except that the cash to fund them may initially be out of reach.
Logbook financing can come in handy for businesses planning to procure capital-intensive equipment.
From printers to laundry machines and office furniture, there are tons of business assets whose acquisition can be funded by logbook loans.
However, it’s best to spend a logbook loan on critical assets – the kind your business requires in its daily operations. Do not use the funds to purchase office comforts.
6. Ideal for Busy Professionals
Our fast-paced lifestyles can make it remarkably challenging to spare enough time for essential tasks like a loan application.
If you follow a hectic professional routine, you want a credit facility to access with minimal time and effort.
Unlike traditional credit facilities that require lengthy approval processes, logbook loans can be accessed within twenty-four hours of submitting your application. That convenience makes this financing option particularly suitable for busy entrepreneurs and professionals.
7. Perfect for the Self-Employed
The informal sector employs millions worldwide. However, while this industry contributes significantly to the global economy, self-employed people are often subjected to disproportionately rigorous background checks when applying for traditional loans.
It’s almost as if the credit industry is deliberately skewed toward those in formal employment.
Fortunately, logbook loans are a welcome exception. The most significant eligibility criterion is possessing a motor vehicle whose logbook is registered in your name.
Logbook loans are generally free from common barriers to credit access, such as a poor credit score.
8. Excellent For Building Credit Score
Since logbook loans are accessible to borrowers with a poor credit rating, they can serve as an invaluable tool for building an excellent credit score.
Simply apply for the loan and honor the repayment terms. Each timely repayment of a logbook loan reflects favorably on your credit score.
Since logbook loans are remarkably accessible, you could even utilize the funding for debt consolidation.
Conclusion
Logbook loans are easy to obtain and come with reasonable repayment terms. Besides, borrowers enjoy the freedom of retaining their vehicle’s ownership and the flexibility to utilize the funding as desired.
And with dozens of trusted lenders, it’s unsurprising that many drivers are turning to logbook loans as a means to obtain quick cash.
However, logbook financing isn’t for everyone. To qualify, the collateralized vehicle must be legally owned by you (among other conditions).
Besides, it’s prudent to research lenders carefully and pick one that matches your lending terms. This is particularly recommended if you’re seeking higher lending amounts.