Logbook loans have been around for a long time, and so have plenty of half-truths about them. Some come from how these loans used to work, and others are simple mix-ups with different kinds of borrowing.
Here we take the myths we hear most often at Logbook Money and set each one against how our loans actually work, so you can decide with the full picture. If you would like a plain-English overview first, read what a logbook loan is.
Myths about your car
Myth: the lender takes your car away
Fact: the car stays with you. You keep the keys and drive it as normal for the whole loan. We never ask for your V5C logbook or your spare key.
Myth: one missed payment and the car is gone
Fact: repossession is a last resort, not a first step. If repayments are getting hard, ringing us early means we can look at the options together. It is still a real risk, though, which is exactly why we only lend when the repayments are affordable for you.
Myths about who can borrow
Myth: you need a spotless credit record
Fact: we look at what your vehicle is worth and whether you can afford the repayments, not just your credit score. Applications with bad credit or CCJs are considered. Our bad credit loans page explains more.
Myth: just asking for a quote will hurt your score
Fact: your quote comes from a soft search, which does not affect your credit score. You can see what you might be offered before deciding anything.
Myths about the loan itself
Myth: a logbook loan is just a payday loan by another name
Fact: they are quite different products. A payday loan is usually unsecured and paid back within weeks or a few months. A logbook loan is secured on your vehicle, runs for 18 to 60 months and is repaid in weekly or monthly instalments. Here is how logbook loans and payday loans compare.
Myth: you are stuck with it until the end
Fact: you can settle early whenever you like and get a rebate on interest. You also have 14 days after the agreement is made to change your mind and withdraw, as long as you pay back what you borrowed plus interest for the days you had it.
Myth: the interest can go up partway through
Fact: your interest is fixed when you sign, and you see your repayment schedule before you agree to anything.
Myths about regulation and paperwork
Myth: logbook lenders are not regulated
Fact: firms offering logbook loans to consumers must be authorised by the Financial Conduct Authority, and Logbook Money is. You can check any lender on the FCA's Financial Services Register. If you ever have a complaint we cannot resolve, you can take it to the Financial Ombudsman Service for free.
Myth: a Bill of Sale is a dodgy bit of paperwork
Fact: a Bill of Sale is a legal document backed by long-standing law. It transfers ownership of the vehicle to the lender as security while you keep using it, and it has to be registered with the High Court. When you finish repaying, ownership comes back to you. Bills of sale are not used in Scotland, so our loans there are Hire Purchase agreements that you sign online.
Myth: your details get passed around
Fact: we are a direct lender, not a broker, and we make the lending decision ourselves. If your application is unsuccessful, we only pass your details to a trusted partner with your permission.
The facts that matter most
Busting myths should never hide the real downsides. A logbook loan is an expensive way to borrow, and because it is secured, you could lose your vehicle if you do not keep up the repayments. This article is general information, not financial advice. Check the representative example on our calculator, borrow only what you can comfortably repay, and if debt is already worrying you, get free, impartial help from MoneyHelper or StepChange before you apply for anything.
Your car may be repossessed if you do not keep up repayments on a loan secured against it.
