A logbook loan is a way of borrowing money using a vehicle you own as security. You keep driving it while you pay the loan back, but if you do not keep up the repayments, the lender can take it. That is the heart of it. The rest of this guide fills in the detail.
We are Logbook Money, a UK direct lender since 2009, so we know these loans inside out. We have tried to explain them as plainly as we can, downsides included.
How a logbook loan works
The name comes from the V5C registration certificate, which most people call the logbook. Despite the name, you do not hand your logbook over, and we never ask for your spare key either.
Instead, you sign a document called a Bill of Sale. It transfers legal ownership of your vehicle to the lender for as long as the loan lasts, while you keep the vehicle and carry on using it. Once you have paid everything back, ownership returns to you. In Scotland, where bills of sale are not used, the same kind of loan is set up as a Hire Purchase agreement.
With Logbook Money you can borrow from £1,000 to £50,000 over 18 to 60 months, and repay weekly or monthly. How much you can borrow depends on what your vehicle is worth and what you can afford. Our how logbook loans work page takes you through applying step by step.
Who a logbook loan might suit
These loans are generally aimed at people in situations like these, though whether one suits you depends on your own circumstances:
- You own a car, van or motorbike outright and there is no finance left on it.
- You have a regular income that comfortably covers the repayments on top of your usual bills.
- You have been turned down elsewhere because of your credit history, but your finances are steadier now.
- You need a sum of at least £1,000 fairly quickly. With us the money usually arrives within 24 working hours of applying.
You can check the basics on our eligibility page before you start.
What a logbook loan costs
Logbook loans cost more than most mainstream borrowing. If you can get a personal loan from your bank or a credit union, it will usually work out less expensive, so it is worth looking there first.
When you compare, look at two numbers. The APR rolls interest and any compulsory charges into a yearly rate, which helps you compare loans side by side. The total amount repayable tells you, in pounds, what you will pay back altogether. Check the representative example on our calculator. With us, interest is fixed when you sign, and you can settle early at any time with a rebate on interest.
The risks to understand
- Your vehicle is at risk. If you fall behind and cannot agree a way forward, the lender can repossess it. Think about how you would manage without it.
- It is a long commitment. Even the shortest term is 18 months. Ask yourself what would happen if your income dropped during that time.
- It adds to what you owe. If you are thinking of borrowing to cover debts or bills you are already behind on, speak to a free adviser first.
Alternatives worth checking first
- A credit union loan. Credit unions are not-for-profit and owned by their members.
- A personal loan from your bank, if your credit record allows it.
- An arranged overdraft or a credit card with an interest-free introductory period, for smaller amounts you can clear quickly.
- A payment plan with the company you owe money to.
- Help from family or friends, with a clear agreement about paying it back.
- A Budgeting Advance, if you get Universal Credit and need help with an emergency cost.
Payday loans are another option people sometimes look at, but they work very differently. Here is how logbook loans and payday loans compare. This article is general information, not financial advice. If money is worrying you generally, MoneyHelper, StepChange and Citizens Advice all give free, impartial advice.
Your car may be repossessed if you do not keep up repayments on a loan secured against it.
