What Is Logbook Loan, How Do Logbook Loans Work And Are They Worth It?

What Is Logbook Loan? Logbook loans are loans secured on your vehicle so that the lender owns your vehicle until you repay the loan. You can continue to use your car as long as you repay the loan. But Logbook loans are expensive and risky and it’s best to avoid them if you can.

What Is Logbook Loan?

A logbook loan is a type of short-term secured loan where your vehicle is used as collateral. While auto finance contracts can also be secured on a vehicle, logbook loans are completely different.

Auto financing lets you buy a vehicle if you can’t or don’t want to buy one, while logbook loans allow you to borrow money using the value of the vehicle you already own.

Logbook loans usually have very high-interest rates, so they are one of the most expensive ways to borrow.

How Do Logbook Loans Work?

When taking out a logbook loan, you transfer ownership of your vehicle to the lender. But even if the lender becomes the legal owner, you can continue to drive your car.

In some cases, you may be required to provide the creditor with your logbook (V5C), proving that you legally own the vehicle, as well as other supporting documents. But even if you don’t physically hand over your vehicle’s logbook, the lender will become the temporary owner of your vehicle until you repay the loan.

The lender has the right to repossess and sell your vehicle to collect the money owed if you default on the loan. You must make up the shortfall if the sale of the vehicle does not settle the debt. If the car sells for more than you owe, the lender must refund the difference.

To get a logbook loan, you need to sign a loan agreement and a document called a “sales invoice,” which transfers ownership of the vehicle. As long as creditors file this bill with the Superior Court, they don’t need a court order to recover your vehicle if you miss payments (since they issued a standard notice and gave you 14 days to make up for missed payments).

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If they don’t register the account, they won’t be able to get your vehicle back unless they’re taken to court.

Logbook Loans are only available in England, Wales and Northern Ireland.

Logbook Loans are not available in Scotland as it does not recognize the sales invoices as legally binding. You may see loans advertised as logbook loans in Scotland, but these are conditional buy or sell contracts, rather than the type of logbook loans you find elsewhere in the UK.

Who is eligible for a logbook loan?

You may be eligible for a logbook loan if:

  • Are you older than 18
  • Do you live in england, wales or northern ireland?
  • You are the owner of your vehicle, then you are listed as a registered owner in the logbook of your vehicle (v5c)
  • Your vehicle is fully taxed and insured and has a valid MOT

When you apply for a loan, lenders will make sure you can make the payments and perform a credit check before deciding whether to approve your application. Because the loan is secured against your vehicle, minimizing risk to the lender, they may be willing to lend you even if you have a bad credit score.

However, even if you qualify for a logbook loan, you should always ensure that you have explored other options and are aware of the risks that this type of loan can entail.

What documents do I need to get a logbook loan?

As the name implies, you need your logbook to get a logbook loan. This is the V5C document showing that the car is registered in your name.

Other than that, each lender may have their requirements for what you need. But as a general rule, it may be worth collecting the following:

  • Tax, MOT and insurance documents – if you can’t find them, you can replace your missing papers
  • A spare key
  • Photo identification, such as a passport or driver’s license
  • Proof of address such as bank statement or electricity bill
  • Salary for the last few months to show regular income.

Can you get a logbook loan if your car is under financing?

If your vehicle is financed, you are not the legal owner and therefore cannot use it as collateral for a logbook loan. You can ask your financial services provider if you can take out a logbook loan, but they may not consent and the logbook issuer may not agree either.

You may be more likely to get a logbook loan if your financing agreement is close and you don’t have much more to pay.

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How much can you borrow with a logbook loan?

The amount you can borrow through a Logbook loan depends on the value of your car and the criteria of the lender. Lenders generally offer loans worth between £500 and £50,000, although you can only borrow up to a certain amount of the total value of your vehicle.

Financiers can carry out their independent valuation of your vehicle.

Always check the payment terms of a Logbook loan. Some agreements may be structured so that you make smaller interest payments over the term and then pay off the principal outstanding with a larger final payment.

Can I get Logbook loan with a bad credit?

Logbook loan lenders tend not to perform credit checks. This can make them a more attractive place to look if you have a bad credit history.

The lender must take steps to ensure that you can make the payments before offering the loan. This should help minimize the risk of having them pick up your car.

What are the risks of logbook loans?

Logbook loans are risky and should not be your first port of call if you want to borrow money. Some of the drawbacks are:

  • They are very expensive. The APR on Logbook loans can be 400% or higher, making them one of the most expensive forms of borrowing.
  • You could lose your vehicle if you can’t keep up with the payments. And because of the invoice, creditors have the right to repossess your vehicle without going through the courts.
  • You may need to make weekly payments instead of monthly.
  • If you choose to take out a Logbook loan, make sure that the lender is regulated by the Financial Conduct Authority and that you are aware of all the terms of the agreement.
  • Also, try to find a lender that is a member of the Consumer Credit Trade Association (CCTA). The CCTA has a code of conduct designed to help consumers as members must follow certain rules regarding payments, repossessions and more.

For example, creditors can’t take back your vehicle unless you owe at least the last two monthly payments or the last four weekly payments (depending on how you pay) and you don’t have an alternative payment plan.

  • If lenders get your vehicle back, the CCTA says they should try not to sell it for at least 14 days so consumers can get it back. Non-CCTA creditors only have to wait a minimum of five days.

Will my car be repossessed if I miss payments?

If you stop paying the loan, the lender has the right to sell the car to pay off the outstanding debt.

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If the value of the car is not enough to cover the entire loan, you may still be liable for the remainder.

But creditors tend not to unless you’ve been late several times.

If they decide to impound your car, they must first send you a standard message and give you 14 days to respond.

Alternatives to the logbook loan

Logbook loans can seem like an attractive option if you need quick cash, especially if you have a bad credit score and struggle to get financing elsewhere. However, there are alternative forms of borrowing, including:

Personal loan.

These loans are unsecured and typically have lower interest rates than Logbook loans, although it depends on your credit score. If you have a bad credit score, some lenders specialize in offering loans to people with less than perfect credit histories. However, bad credit loans will also be accompanied by higher interest rates.

Credit card.

If you need to borrow some money, consider using your existing credit card or applying for a new one. Depending on the type of credit card you have and the interest you pay, it is likely to be a cheaper option, especially if you buy 0% offers. Do not just pay the minimum amount every month and always pay on time. It’s also important to remember that 0% interest credit cards can be hard to come by if you have a less than perfect credit score.


If your checking account is overdrawn and you only need to borrow a small amount for a short period, this may be a better option than a logbook loan. However, be aware of the fees that may apply and make sure you pay them before the interest builds up.

Vehicle Equity Release:

Instead of having your car threatened with an impoundment, look at releasing vehicle power. Here you sell your car to the lender and then buy it back in a lease-purchase agreement or personal purchase agreement. This may also provide some protection under the Consumer Credit Act 1974. This also means that this type of loan may be available in Scotland.

Budgeting Loans:

If you need money to cover unexpected costs, you can get a budgeting loan from the government. Depending on your situation, you can borrow between € 100 and € 812. If you are looking for a relatively small amount, this may be an option.

Borrow from family and friends.

Whether this is a viable option will depend on your circumstances and your relationships with family and friends. Borrowing money from people you know can cause complications and tension, so make sure both parties agree on instalment schedules and other terms in advance. To avoid disputes in the future, it makes sense to write down the sign and date of the loan amount and the repayment schedule.

If you are struggling with your finances and any debt you have accumulated, seek professional advice. Several charities can provide free support and guidance to help you stabilize and improve your financial situation.