Logbook Loans


A logbook loan is simply a loan secured on car or vehicle. Your vehicle is therefore held as collateral when securing such a loan. It’s an elegant solution to those with bad credit hoping to get some quick cash. Unlike many other lending avenues, a bad credit rating isn’t much of an issue, so you won’t be disqualified even when you’ve got a tainted credit score. With your car present, there is a tangible security, and this goes a long way in minimizing the risk for the lender.

How they work.

Logbook loans are based on the premise of vehicles being used as security. This means that the lender legally owns your vehicle for the duration of the loan. However, you will still retain the vehicle in your possession. This is made possible by the Bill of Sale. It is the document that transfers ownership of the vehicle to the lender, and it has to be signed before the loan is in effect. The lender can therefore repossess your vehicle once you fail to pay your loan. The V5 logbook, after which the loan is named, has nothing to do with legal ownership of the vehicle. It is typically taken by the lender for the loan’s duration as a symbol of transfer of ownership. However, the details in the document remain yours and show you as the registered keeper of the vehicle. Once you pay back your loan, it’s returned unchanged.


The amount you can borrow varies from £500 to £50,000. This amount depends on a number of factors such as your vehicle’s value and your income. For instance, having an old car with a relatively low monthly income will mean you can’t borrow much. In many cases, you are only allowed to borrow a value up to 50% of you vehicle’s trade value.

Considerations before applying for a logbook loan.

Logbook loans can be very costly if you don’t know what you are doing. Although they generally offer high amounts compared to unsecured loans, the high interest rates and the risk of repossessing of your vehicle mean you could end up paying a lot. The market APR for logbook loans is quite high, averaging at around 400%. Therefore, before securing a loan, try looking around for lenders with lower APRs. Also, check the contract and ensure it’s compatible with your payment plan. Some lenders charge early repayment fees if you decide to clear your debts earlier than stipulated. Avoid them if you plan on repaying your debt quickly. Additionally, seek lenders with the best reputation since some may be fraudulent or unscrupulous.


Requirements for logbook loans.

In the U.K, you’re only eligible for logbook loan application once you have met a number of conditions. You must be a resident of the UK and 18 years old and above. You must also supply relevant identification such as a passport. Proof of income such as pay slips are crucial to give an idea of your ability to pay the loan. You must also own a vehicle and the pertinent logbook. Take steps to ensure that the vehicle is free from any pending payments. Vehicle insurance documents and the MOT are also paramount.