Logbook Loans - How to Borrow Money Against Your Car's Logbook

If you own your own vehicle and need money to pay for an emergency expense, a logbook loan could be something to think about. However, it's very important to understand how this type of borrowing works before you make an application.

The Little Loans guide to logbook loans answers some commonly asked questions, such as:

• What is a logbook loan?
• How do logbook loans work?
• Where can I find direct lender logbook loans?
• Could I get a logbook loan with bad credit?
• How much money could I get with a logbook loan?
• Are there any alternatives to logbook loans?

What is a logbook loan?

A logbook loan is when you borrow money from a lender, typically to cover an unexpected expense, and you use your car's logbook as security. This means that if you're unable to repay the loan, the lender is within their right to seize your vehicle and sell it to recover the money they've lost.

Can I still use my car if I take out a logbook loan?

Yes, you'll still be able to use your car as normal while repaying your logbook loan, but please be aware that if you make a late repayment or miss one altogether, you could lose access to your car.

How do logbook loans work?

1. When you apply for a logbook loan, you'll usually need to provide your car's registration number and the mileage. You might have to have your car valued before or during the application process; the lender will let you know more.
2. If approved for a logbook loan, you'll need to sign a 'bill of sale.' This is a legally binding document that temporarily transfers ownership of the vehicle to the lender. The lender may also ask for your logbook and/or a spare key to the vehicle, which they will keep until the loan has been repaid in full.
3. You can continue driving your car as usual while repaying the loan, although you cannot sell it. You must make your repayments in full and on time.
4. Once the logbook loan has been repaid, the lender will return the spare key and logbook.

Things to think about before you apply for a logbook loan

• Important When you take out a logbook loan, interest will be included in your repayments. The interest rate on a logbook loan can be high. The higher the interest rate, the more you could pay in interest. Please consider how this will affect your financial situation.
• A loan is a serious financial commitment. You should never apply for a loan unless you're certain that you can make your repayments. Repaying a loan should never leave you in a position where you're unable to pay for your monthly essential costs, such as food and bills.
• It's crucial to remember that if you make a late repayment or miss one altogether, you could lose access to your vehicle. Your credit score may also decline as a result.

Do logbook loans still exist in the UK?

Yes, logbook loans still exist in England, Wales, and Ireland, although they are not available in Scotland.

Logbook loans online: who can apply for a logbook loan?

Logbook loan eligibility criteria vary between lenders, but typically, you'll need to

• Be over the age of 18
• Live in England, Ireland or Wales
• Have a UK bank account and a valid debit card
• Be the legal owner of a vehicle that's insured, taxed, and has an up-to-date MOT. Some direct logbook loan lenders may require the vehicle to be in a certain condition.

How much money could I borrow with a logbook loan?

Logbook loans typically start at £500 and go up to £50,000, although the amount of money that could be available to you will depend on the value of your car. Some lenders may only lend up to half of your vehicle's value.

You should never apply to borrow more money than you need to or can afford to repay.

Logbook loan repayment terms: how long could I borrow money for?

Many logbook loans are repayable within 78 weeks, which works out at approximately 18 months. Still, repayment terms will vary between lenders and could depend on the amount of money you apply to borrow.

Logbook loan comparison: best logbook loan company

There isn't one company that can be described as 'best' for logbook loans. If you decide that a logbook loan could be a suitable choice for you, you should shop around and gather some quotes before you make an application.

Pay close attention to the Annual Percentage Rate (APR) offered. The higher the APR, the higher the loan will cost.

When looking at logbook loan comparisons to find the best logbook loan company for you, you may also wish to read through the company's customer reviews on Trustpilot or Google. While reviews should always be taken with a pinch of salt, consistently positive or negative customer reviews can be insightful.

Could I search for a logbook loan with Little Loans?

Little Loans works with a very small number of lenders who offer logbook loans. We could also help you search for a logbook loan alternative.

The lenders on the Little Loans panel offer short-term personal loans between £100 and £10,000, with repayment terms of 3 to 60 months. The repayment terms available to you will depend on the amount of money you apply to borrow.

Alternatives to logbook loans: search for a short-term loan with Little Loans

You can search for a short-term loan with Little Loans if you:

• Are over the age of 18
• Are a UK resident
• Have a UK bank account and a valid debit card; and
• Have a regular source of income paid into your bank account.

Logbook loans for bad credit

You could be considered for a logbook loan, even if your credit score is looking worse for wear.

It's worth pointing out that a bad credit logbook loan isn't necessarily your only option when searching for a loan to cover an emergency expense.

You could be considered for a short-term personal loan with bad credit. Several of the lenders on the Little Loans panel specialise in short-term loans for people with bad credit.

A bad credit loan may come with a higher interest rate, increasing the overall cost of borrowing. Please consider how this will affect your monthly outgoings.

I can't afford to repay my logbook loan; what should I do?

If you're struggling to repay your logbook loan, you should contact your lender as soon as possible. There may be things they can do to support you, such as offering a repayment holiday or temporarily reducing your repayments.

Important if you don't keep up with your logbook loan repayments, you could lose access to your vehicle. Late or missed repayments will be reported to credit reference agencies (CRAs), which could cause your credit score to decline.

I need to talk to someone about money; who can I turn to?

If you're worried about money, please consider reaching out to any of the following charities and organisations, which offer free, confidential advice: StepChange, MoneyHelper, Citizens Advice and National Debtline.