Logbook Loans are different from other types of loans in the sense that they are secured loans. This means that lenders require borrowers to put up collateral, such as vehicles, properties and other assets. Logbook loans are one of the most popular loan products offered by financial institutions. They allow individuals to borrow money with a fixed repayment period based on the number of days a borrower has had their bank account for the previous six months. Therefore, you will only be required to repay a logbook loan if your checking account balance is above a minimum threshold for at least 6 months before.
What Is a Logbook Loan?
A logbook loan is a type of loan that uses your motor vehicle as security – a car, van, tractor, or motorbike. It allows you to borrow an agreed amount from the lender against the value of your vehicle. In return, the vehicle ownership is temporarily transferred into joint ownership with the lender until you fully repay the loan plus interest.
To secure the loan, you provide the lender with the vehicle ownership documents, the logbook. During the loan period, you can continue using the vehicle normally.
However, a logbook loan should not be confused with a vehicle loan (asset financing). A vehicle loan is a loan that allows you to finance the purchase of a vehicle (if you can’t afford it or are not willing to purchase it in cash). In contrast, a logbook loan allows you to take a loan using an existing vehicle as collateral.
Mwananchi credit logbook loans in kenya
With most lending companies offering loans from as low as 30% of the value of the car, Mwananchi credit offers up to 80% of the car value. Cheap car logbook loans in Kenya, enable car owners to get instant cash fast. Like most secured loans, these loans accompany specific interest rates from as low as 1.6% based on the repayment plan and amount borrowed. If you need quick cash using your vehicle as security, a logbook loan is a great option.
You can get up to 80% of the value of the car ( with newer models fetching higher ratios). You can as well combine several logbooks into one loan ( if you have a fleet of vehicles) and can qualify from a minimum of Kshs 100,000 to as much as Kshs 25,000,000 in a single loan.
Logbook Loans at Mwananchi Credit take six hours or less from the application, processing until disbursement is done.
What to look for in a Logbook Loan?
When comparing logbook loans in Kenya, you will want to consider the following factors:
Interest rates – Like most secured loans, these loans accompany specific interest rates from as low as 1.6% based on the repayment plan and amount borrowed.
Loan period – You’ll need to repay the loan within a certain period, depending on the type of logbook loan you take out.
Loan amount – The loan amount that you can get will be dependent on the value of your car.
Repayment schedule – The repayment schedule will be outlined in the loan agreement that you sign with your lender.
Collateral – Your car is the collateral for the loan, so you want to make sure that you secure it properly.
Payments – You will be required to make payments regularly.
Documents required – You will need to provide certain documents when applying for a logbook loan.
Advantages of getting a logbook loan in kenya
Quick funding – Since you don’t have to prove any income, you can receive your loan amount quickly, within 6 hours of application.
Easy application process – You only need to provide the details of your car, and the lender will do the rest.
Low-interest rates – Logbook loans come with lower interest rates than other types of loans.
No credit check – You won’t have to endure a credit check to get this type of loan.
No mortgage or other obligations – Logbook loans are unsecured, which means that you don’t have to put your house up as collateral.
Flexible loan amount -The loan is based on the value of your vehicle, and you can therefore borrow as much as you need up to the value of the vehicle – depending on the lender. In general, the minimum loan size is as low as Ksh50,000 and the maximum for some providers goes to Ksh25M- depending on your car value. Usually, you can borrow somewhere between 50-80% of your car value.
Use as you want– Unlike other loan types such as business loans, logbook loans do not have limitations on what the funds can be used for. You can use it to cover whatever costs you need to, provided you have a plan to repay it in full.
Considerations before taking out a logbook loan
No interest-free period – You don’t get an interest-free period when taking out a logbook loan.
Vulnerable to fraud – Since the logbook loan is unsecured, it is more vulnerable to fraud than other types of loans.
Think about what you need the money for – Logbook loans help take advantage of quick opportunities such as buying land, etc., dealing with an emergency, or growing your business but before you decide to take a logbook loan, you should first think about why you need the money and what for.
High upfront fees – Nearly all logbook loan providers will charge an applicant upfront fees that have to be paid before the loan is disbursed. Since these fees can significantly raise the total cost of the loan, it is important to do the math, compare options and only make a decision when you are confident of the facts.
The value of your vehicle – The qualifying loan amount is pegged on a percentage of the vehicle’s forced sale value (FSV). FSV is the amount the car would sell at if needed to be sold. So 50% of FSV means if your car’s FSV is Ksh600,000 you can only get up to Ksh300,000.
Repayment period. In most cases, the repayment period is determined by the lender. The lender might ask you for a weekly payment.
Penalty. There are penalties for missed payments. Also, you might get a penalty for clearing the loan too quickly without a prior discussion with the lender.
Requirements for logbook loans in kenya
If you have once or twice googled ‘logbook loans in Kenya’ and own a private, commercial, or passenger service vehicle, you are eligible for a logbook loan at Mwananchi Credit. Yet, you need to meet the minimum requirements before getting approved. These requirements include;
Original car or motorbike logbook
KRA PIN of the applicant
Original national ID card of the applicant
Two passport-size photos
Six months bank statement
Comprehensive insurance certificate cover
Risks associated with logbook loans
Repossession – If you don’t make payments, the lender can repossess your car.
Increase in interest rates – Since the lender will have to hold on to your car’s logbook, they can increase your interest rate.
Loss of collateral – If you don’t make payments, the lender can repossess your car.
Additional fees – If you miss a payment, the lender can charge you a fee.
High-interest rates – Logbook loans have high-interest rates, which means that you will have to pay more than if you were to take out an unsecured loan.
How to get a logbook loan in Kenya
Mwananchi Credit thrives in providing logbook loans in Kenya, especially with its swift processing and disbursement approaches. Irrespective of the loan amount you need, Mwananchi Credit can quickly grant you the funds depending on your car market value. Essentially, borrowers can get any amount sought when looking to handle different emergencies.
What makes Mwananchi Credit stand out from banks and other financial lenders is approving loans without considering credit scores. The lender solely focuses on getting ownership of the vehicle in question and the capability to repay the granted amount. Several banks and independent lenders in Kenya will deny borrowers auto logbook loans instantly, more so when they have a bad credit history despite mending it over time.
Besides, most logbook loan lenders contemplate a substantial risk leading borrowers to expect increased interest rates. But with Mwananchi Credit, you get logbook loan solutions at competitive rates. Besides higher loan amounts, borrowers have a flexible repayment schedule, ensuring you get what you need without compromising your finances.