Logbook loans can seem like a modern product, built around cars and online forms. In fact, the law that makes them possible in England and Wales is well over a century old. What has changed enormously is the way they are regulated, how lenders decide who can borrow and how you apply.
Here is a short timeline of how we got from Victorian paperwork to the logbook loans offered today, and what each change means for you as a borrower.
The Victorian roots: the Bills of Sale Acts
In the 19th century, people who owned valuable goods but not land had few ways to borrow against them. A bill of sale let a borrower transfer ownership of goods, such as furniture or tools, to a lender as security while keeping hold of them. Parliament set the rules in the Bills of Sale Act 1878 and the Bills of Sale Act (1878) Amendment Act 1882.
The 1882 Act is still the basis of a Bill of Sale today. It sets out a fixed form the document must follow, requires it to be witnessed, and says it must be registered at the High Court within seven clear days of signing. Those formal rules are the reason a signing agent usually visits to witness your signature in person. The Acts do not apply in Scotland, which is why Scottish customers borrow under a Hire Purchase agreement instead.
From furniture to cars
As car ownership spread through the 20th century, vehicles became the most common thing people owned that held its value and could be identified easily. Lenders began using Bills of Sale over cars, and the term "logbook loan" grew from the vehicle registration document, the V5C logbook, which shows who the registered keeper is.
For years, consumer lenders were licensed by the Office of Fair Trading under the Consumer Credit Act 1974. Standards across the market varied, and logbook lending gained a mixed reputation. Logbook Money began lending in 2009, during this period.
Calls for reform
Because the Victorian Acts were written long before consumer protection law developed, they were reviewed more than once. The Law Commission looked at Bills of Sale in detail and, in 2017, proposed replacing them with a new Goods Mortgages Bill. In 2018 the government decided not to go ahead with that bill, pointing to the small size of the market and wider work on high-cost credit, so the 1878 and 1882 Acts remain in force.
2014 onwards: regulation by the FCA
The biggest change came on 1 April 2014, when the Financial Conduct Authority took over regulation of consumer credit. Logbook lenders now need FCA authorisation and must follow its detailed rules. Among other things, these require lenders to:
- carry out proper checks that a loan is affordable before lending;
- give clear information about the cost of borrowing;
- treat customers in financial difficulty fairly; and
- handle complaints properly, with access to the Financial Ombudsman Service if you are not happy with the outcome.
The FCA's Consumer Duty, which came into force in July 2023, raised the bar further. Firms must now show that their products offer fair value and that customers are getting good outcomes. You can check any lender's status on the FCA Register.
How applying has changed
Affordability is now at the centre of every decision. At Logbook Money, an underwriter reviews your bank statements and calls you to understand your circumstances. The decision is based on your vehicle's value and your affordability, not just your credit score.
The process itself has moved online. You can get a personalised quote using a soft search, which does not affect your credit score, and in Scotland the Hire Purchase agreement is signed online. Where a Bill of Sale is used, the signing agent's visit is still needed to meet the legal formalities, but it usually happens within three working hours, and money is usually paid by bank transfer within 24 working hours of applying. You can read more in our guide to how logbook loans work.
What has not changed is that a logbook loan is secured on your vehicle and is an expensive way to borrow. Before applying, it is worth comparing your options using our guide to the cost of different types of borrowing. This article is general information, not financial advice. For free, impartial help with your own situation, contact MoneyHelper or StepChange. You can also find out more about Logbook Money.
Your car may be repossessed if you do not keep up repayments on a loan secured against it.
