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A straightforward guide to logbook loans

Logbook loans secured against your vehicle can be a huge financial help. Find out more about logbook loans with this guide.

What is a logbook loan?

A logbook loan is a type of secured lending, allowing you to borrow money against the value of your car, motorbike or van. How logbook loans work is by securing the loan against your vehicle, which the lender uses as a deposit until you pay the loan back. When you take out a logbook loan you will be asked to hand over the registration documents or “logbook” until the loan is repaid.

This means that the lender temporarily owns your vehicle, allowing you possession and full access so long as you meet the repayment requirements of the loan.

How much can you borrow?

Normally you can borrow up to 50% of the value of your vehicle, although some lenders may offer more or less than the total value. This may be anywhere between £500 and £50,000 depending on your circumstances and the value of your vehicle. As a secured loan, it is important to keep up with the agreed repayments, otherwise you are at risk of losing the vehicle.

You can usually still take out a logbook loan even with finance left on the car, if your existing payments are coming to an end, and the outstanding amount is low – but this can depend on the lender.

What documents do I need for a logbook loan?

Provided you are over the age of 18 and can guarantee you are able to meet the agreed monthly repayments, your application will, at the very least, be reviewed. You will then usually be required to provide your vehicle’s registration documents or logbook to prove your ownership of the vehicle.

Can I get a logbook loan with bad credit?

A logbook loan is secured against your vehicle as the asset. While this means lenders can be more flexible with their loan arrangements, it does also mean that failure to keep up with repayments may mean losing the vehicle.

The main concern is whether you can prove you are the vehicle owner and are able to meet the repayments. Thankfully, lenders tend not to focus on what your credit score is considering the collateral involved, and repaying your logbook loan could even help improve your credit rating.

Paying the loan back

Logbook loan rates can be up to 400% APR (Annual Percentage Rate) or higher. You can usually choose between a weekly or monthly repayment for the duration of the loan. In some arrangements, you’ll only pay off the interest accrued during the loan duration, with the full original amount borrowed due as a lump sum at the end of the term.

Make sure you understand the terms of your agreement and that you can afford the repayments.

What are the benefits?

Logbook loans can usually be taken out against most types of vehicles, and you can also spend the money on whatever you like, not just on buying a car. A poor credit history can give you fewer options to borrow money, so logbook loans offer the opportunity to do so by using your vehicle.

The option to pay weekly could help make repayments easier to manage than having to pay a larger amount all at once, but this depends on your own individual circumstances.

Who is eligible?

To apply for a logbook loan, you must be over 18, legally own your vehicle, and your name must be on the V5C registration document. Your car must also have a valid MOT. Most lenders want to inspect the vehicle before releasing the money you want to borrow, so you will need to be ready with your vehicle, logbook, proof of insurance and tax. Remember that your income, credit history and existing borrowing may affect the amount that you are able to borrow.

With a wide range of benefits, logbook loans are a useful way of helping you to make your new car purchase a reality. It is important to clearly understand the terms of any agreement you enter and be sure that you can meet the schedule of repayments.

Find out more about logbook loans and borrowing from lenders with Norton Finance Know How.


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