Logbook Loans

A logbook loan is a form of credit that could be an option to consider if you own your vehicle outright and need access to emergency finance.
The key thing to be aware of is that logbook loans work differently to short-term loans. Our guide takes a closer look at these differences, as well as exploring the potential risks involved with this specific type of borrowing.

What is a logbook loan?

A logbook loan takes its name from your vehicle’s logbook. This is the registration document which proves you are the registered keeper of your vehicle.

A logbook loan is a way to borrow money against a vehicle that you own.
When you take out a logbook loan, the car is used as security against the repayments. You will still have possession and full use of the car, although it’s worth noting that you cannot sell the vehicle until the loan has been repaid in full.
If the loan is repaid in full and on time, you will retain possession of the vehicle; however, if you fail to repay, your car could be seized to cover the debt.

How do Logbook Loans Work?

Logbook loans work when a borrower and a lender agree to a loan amount and secure the money against a vehicle. The borrower’s vehicle becomes a secured asset, which provides the lender with additional security in the event that the loan is not repaid.
Available loan amounts will vary between lenders; some may offer you up to half of the vehicle’s value, whereas others may agree to lend you the total sum. You may need to have your car valued before you make an application for a logbook loan.
Remember, you should never borrow more money than you need or can afford to repay.

When taking out a logbook loan, you may be asked to give your logbook or a spare key to the lender. You will also need to sign a credit agreement and a bill of sale.

What’s a bill of sale?

A bill of sale is a legally binding document required to transfer ownership of goods.
In the context of a logbook loan, the bill of sale gives the lender legal ownership of your vehicle. Both you and the lender will need to sign the bill of sale.

Once your logbook loan has been repaid, you will once again become the legal owner of the vehicle.

Can you still get a logbook loan in the UK?

You could get a logbook loan in England, Wales and Northern Ireland; however, they are not available in Scotland. This is because a bill of sale is not considered to be a legally binding document in Scotland.

Am I eligible for a logbook loan?

Eligibility criteria will vary between lenders, but in order to apply for a logbook loan, you typically must:

Can I get a logbook loan if I have bad credit?

You might be able to get a bad credit logbook loan, but this will depend on the individual lender.

If you have bad credit, you should think very carefully before you decide whether to apply for a loan. A loan will impact your credit score; if you make a late repayment or miss one altogether, your credit score will decline. Of course, as discussed, defaulting on a logbook loan will have further repercussions, and could result in your vehicle being seized by the lender.

Managing your loan effectively and making your repayments in full and on time each month could result in an improvement to your credit score, although you’ll need to make sure that any other existing credit commitments are also kept up to date.

How is a logbook loan repaid?

Depending on the lender, your logbook loan may be required to be repaid in weekly or monthly instalments. An alternative method of repaying your logbook loan could be to make an interest-only payment each month and then clear the overall debt at the end of the term.

Logbook loans usually come with repayment terms from 12 months to 36 months, although this will vary between lenders.

How much do logbook loans cost?

The cost of a logbook loan will depend on how much money you borrow and the Annual Percentage Rate (APR).
APR refers to the yearly cost of borrowing and includes interest and standard fees. Please note that additional fees, such as late or early repayment charges, are not included in the APR. If you’ve chosen to search for a logbook loan, you may wish to enquire whether your chosen lender charges an early repayment fee in case this is something you need to factor into costs further down the line.

When comparing logbook loans, you should be aware that the higher the APR, the higher the cost of borrowing. You should consider how this will impact your ability to make your monthly repayments. Repaying a loan should never leave you in a position where you’re unable to cover your essential outgoings, such as housing, bills, and food.

Research carried out by the FCA revealed that logbook loans are typically offered with an APR of over 400%.

What happens if I can’t afford to repay my logbook loan?

If you’re worried that you’re going to miss an upcoming repayment, you should contact your lender as soon as possible and explain the situation. There may be things they can suggest which could help to ease some of the financial pressure you’re facing.
While reaching out and speaking to your lender can feel daunting, it’s important to keep them in the loop with any issues you’re facing in regard to making your repayments.

In line with your logbook loan credit agreement, if you default on a repayment, you risk losing your vehicle to the lender.
If the bill of sale has been registered, the lender is within their rights to seize the vehicle without the need of a court, although you must be sent a default notice before this can happen. A default notice gives you 14 days to make any missed repayments.

This article on the National Debtline website includes some further information about what can happen if payments are breached with a bill of sale in place, including your rights.

Apply for a logbook loan

Before you search for a logbook loan, it’s vital to understand the risks involved with this type of borrowing. A loan is a serious financial commitment, and defaulting on a repayment will damage your credit score. In addition to this, your lender may charge a fee. Failing to make a repayment on a logbook loan could also result in you losing access to your vehicle.

If you’ve carefully weighed up the risks and have decided that a logbook loan could be a suitable option for you to consider, you should make sure that the lender you apply with is authorised and regulated by the FCA. You can check to see whether a company appears on the FCA register here.

Can I get a logbook loan through CashLady?

CashLady is a credit broker, working with a panel of over 30 FCA authorised and regulated UK-based lenders.
None of the lenders on the CashLady panel offer logbook loans. They do, however, offer short-term, personal loans from £100 to £10,000, with repayment terms between 3 and 60 months, depending on the amount of money you apply to borrow.
If you apply for a loan with one of the lenders on our panel, you will not be required to secure the money against your vehicle, or any other asset.

A number of the lenders on the CashLady panel specialise in loans for people with bad credit, so your application may still be considered even if you have a history of poor credit.

Why choose CashLady as your logbook loan alternative?

*Payout time scales will vary between lenders. The time it takes for the money to appear in your account will depend on your bank’s policies and procedures.

I need help with money and debt; where can I get advice?

Free, confidential money and debt advice can be accessed through various charities and organisations, including StepChange, MoneyHelper, Citizens Advice, and National Debtline.