A straightforward guide to logbook loans
What is a logbook loan?
Logbook loans allow you to borrow money against the value of your car. These loans are secured 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 requirements of the loan.
How much can you borrow?
Normally you can borrow up to 50% of the value of your car, although some lenders may offer more or less. This may be £500 to £50,000 depending on your circumstances and the value of your vehicle. As a secured loan, it is important to keep up with the repayments otherwise you are at risk of losing the car. 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.
Paying the loan back
Logbook loan rates can be up to 400% APR (Annual Percentage Rate) or higher, though with our access to a large range of products we will help to find a competitive rate that suits you. You can choose between a weekly or monthly repayment scheduled for the duration of the loan. Some lenders charge the interest throughout the loan, with the original loan amount to repay at the end of the loan term, so 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 few 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 into, and be sure that you can meet the schedule of repayments.