When you need money quickly, it is tempting to focus on one question: how much can I borrow? But the amount you borrow is only half the story. What really matters is how much you will pay back in total and whether any extra charges could be added along the way.
Reputable lenders have to set out their costs clearly. Even so, it pays to know what to look for. Here are the questions we suggest asking before you sign any logbook loan, with ours included.
What is the total amount I will repay?
This is the single most useful figure on any loan quote. It includes the amount you borrow plus all the interest and any compulsory charges over the full term. Comparing the total repayable across lenders, for the same amount and term, shows you which loan really costs less.
Be careful with comparisons based only on the weekly or monthly payment. A longer term makes each payment smaller but usually means you pay more interest overall. The APR is also helpful because it reflects the yearly cost including compulsory fees, but the total amount repayable is easier to picture.
At Logbook Money, your interest is fixed when you sign, so your repayments do not change. You can check the representative example on our logbook loan calculator before applying.
Are there any set-up, arrangement or admin fees?
Some lenders add charges for setting up the loan, registering the Bill of Sale or visiting you to sign. Ask directly whether any fees are payable and whether they are added to the loan or taken from the amount you receive. If a fee is deducted from your payout, you will get less money than you asked for but still repay the full sum.
Never pay a fee upfront before receiving a loan. Asking for money in advance is a common sign of a scam.
What happens if I miss a payment?
Missed or late payments can lead to extra charges and interest, as well as damage to your credit file. Under FCA rules, any charges for missed payments should reflect the lender's reasonable costs, but they still add to what you owe.
Ask the lender:
- What charges apply if a payment fails or is late?
- Will you contact me before adding a charge?
- What support do you offer if I am struggling?
If you think you may miss a payment, contact your lender straight away. Free advice is also available from StepChange and National Debtline.
Can I settle early, and what will it cost?
By law, you can repay a regulated loan early, in full or in part, and you are entitled to a rebate of some of the interest. Some agreements allow the lender to charge a small amount of compensation when you settle early, so check what yours says.
With Logbook Money, you can settle early at any time with a rebate on interest. Ask us for a settlement figure, and once the loan is repaid, ownership of your vehicle returns to you.
Have I read the SECCI and the credit agreement?
Before you sign, the lender must give you a document called the Standard European Consumer Credit Information, usually shortened to SECCI. It sets out the key facts in a standard format: the amount of credit, the term, the interest rate, the APR, the total amount repayable and the charges that may apply. Because it follows the same layout for every lender, it is the best tool for spotting differences.
Read it alongside the credit agreement itself and check that the figures match your quote. If anything is unclear, ask for it to be explained before you sign. The lender should be happy to do this.
After signing, you normally have 14 days to withdraw from a credit agreement. You would need to repay the money borrowed plus any interest for the days you had it.
Know your options before you borrow
A logbook loan is secured on your vehicle and is an expensive form of credit, so think carefully about whether it suits your circumstances. Our guide to comparing the cost of borrowing can help you weigh it against other options, and our FAQs answer common questions about how our loans work.
This article is general information, not financial advice. For free, impartial help with your own situation, visit MoneyHelper.
Your car may be repossessed if you do not keep up repayments on a loan secured against it.
