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Logbook Loans – How to Borrow Money Against Your Car’s Logbook

Did you know that, by using a logbook loan, you can be paid up to 70% of the value of your car in cash and still drive around in it as normal? With some cars (particularly higher value cars), a logbook loan company may be able to offer you more than 70%.

In this article, we'll answer the most frequently asked questions that borrowers have about logbooks loans.

What is a logbook loan?

In the way that you take out a mortgage on a house, but you can still live in it, a logbook loan is much the same.

With a mortgage, you offer your home as security but, with a logbook loan, you offer your car instead.

If you rely on your car for work and for your family, it's particularly important that you're certain that you'll be able to repay the loan as agreed. After all, how manageable would your day to day life be without a car?

How do logbook loans work? 

A logbook loan is secured against your car using a legal device known as a "bill of sale". Logbook loans are purely consumer loans, and lenders may request the vehicle registration documents to be handed to them.

How do I apply for a logbook loan?

All you have to do is make a secure online application direct to a logbook loan lender. To find those lenders who might be able to help you, simply search Google.

When you apply, your lender will require you to provide:

  • various documents for to prove your identity and proof of your ownership of the car
  • employment information (status, trade, income, and so on)
  • monthly expenditure (such as existing credit accounts, food and utility bills, and mortgage/rent payments, for example)

You may be offered an initial quote on the lender’s website based upon your registration number and your mileage. However, please be aware that this offer may be subject to change depending on the condition of your car.

Many logbook lenders will require you to meet an appointed representative of theirs at a given date and time so that they can inspect your car and then present you with the financial agreement documentation. These documents will contain the terms and conditions governing any loan which the lender makes to you.

When you have signed the agreement documents, many lenders release the money to you on the same day via a direct transfer to your current account.

How much can you borrow with a logbook loan?

The amount you can borrow varies from lender to lender. Some logbook loan companies may lend up to £50,000 and even more but, ultimately, the amount you can actually borrow (subject to status) is based on:

  • the value your car would fetch at sale
  • your ability to afford the loan repayments
  • your credit history

How do I apply for a logbook loan?

All you have to do is make a secure online application direct to a logbook loan lender. To find those lenders who might be able to help you, simply search Google.

When you apply, your lender will require you to provide:

  • various documents for to prove your identity and proof of your ownership of the car
  • employment information (status, trade, income, and so on)
  • monthly expenditure (such as existing credit accounts, food and utility bills, and mortgage/rent payments, for example)

You may be offered an initial quote on the lender’s website based upon your registration number and your mileage. However, please be aware that this offer may be subject to change depending on the condition of your car.

Many logbook lenders will require you to meet an appointed representative of theirs at a given date and time so that they can inspect your car and then present you with the financial agreement documentation. These documents will contain the terms and conditions governing any loan which the lender makes to you.

When you have signed the agreement documents, many lenders release the money to you on the same day via a direct transfer to your current account.

How much can you borrow with a logbook loan? 

The amount you can borrow varies from lender to lender. Some logbook loan companies may lend up to £50,000 and even more but, ultimately, the amount you can actually borrow (subject to status) is based on:

  • the value your car would fetch at sale
  • your ability to afford the loan repayments
  • your credit history

Can I get a logbook loan?

To be eligible for a logbook loan (subject to status), you must:

  • be over the age of 18
  • live in England, Walesor Northern Ireland
  • have a regular income
  • provide a valid telephone number and email address
  • be registered on the electoral roll at your current address
  • be able to demonstrate to a lender that you can comfortably afford the repayments on the terms agreed
  • own a vehicle which you're insured to drive, have a current MOT on that vehicle, and be up to date on your road tax payment schedule.

What documentation will I need to supply the logbook loans company?

You’ll need to present some or all of the following registration documents as part of your application:

  • The V5 logbook (showing your name)
  • Documentation showing that your car's road tax is up to date
  • Documentation showing that your car has a valid MOT
  • Your insurance paperwork
  • Standard photographic identification (for example, your driving licence or passport)
  • A utility bill from the previous 3 months showing the same home address as on your application form
  • Your previous 2 months’ bank statements
  • Your previous 2 months’ pay slips
  • Spare key (if you have one)

If you're self-employed, you'll typically need to send the invoices you've issued in the last 2 months instead of your payslips, however every lender has their own individual requirements and the ones you approach for a logbook loan may each ask for additional information from you.

Can I get a logbook loan with bad credit?

Each lender will have its own policy on whether they will approve loans to customers whose credit history is less than perfect.

Many are happy to consider your current financial and personal circumstances as well as what's on your credit report when making their decision. However, a poor credit history may mean that the interest rate you pay will be higher making the monthly repayments more expensive.

The interest payable on logbook loans varies depending on the finance company you've approached, the make of your car, your financial circumstances, and your credit score.

Finance providers often display a representative APR interest rate on their websites to give you an idea of the cost of their loans.

What do logbook loans cost?

The interest payable on logbook loans varies depending on the finance company you've approached, the make of your car, your financial circumstances, and your credit score.

Finance providers often display a representative APR interest rate on their websites to give you an idea of the cost of their loans.

However, the rates offered to some customers, including yourself, may be higher or lower than the representative APR. This will affect the size of your monthly repayments (weekly repayments may be offered by some finance companies).

There may also be a late payment charge and other fees payable if your account falls into arrears. Please carefully check any quote you receive and satisfy yourself about the actual likely cost of a loan before you enter into an agreement.

Paying back loans against your car

When a logbook lender agrees to a loan, they will send you a schedule showing you when you have to make repayments and how much each of these of payments will cost you.

If you choose to proceed, then the payments will be taken out from the current account you select on the given dates.

If you do not repay your logbook loan

In the first instance, you should contact your logbook loan's customer services team as soon as you realise that you'll struggle to meet future monthly repayments. In many cases, your logbook loan company will then attempt to agree an alternative repayment plan with you.

If you don't keep up repayments on an alternative plan or if the finance company believes that the amount of time you're asking for to catch up is too long, they may declare your account as being in default and attempt to sell your car.

You should not take out a logbook loan if you are not certain of where the money will come from to make each monthly payment. If you are concerned about your level of indebtedness and your ability to manage your current finances, you may benefit from getting in touch for free advice and support from one of the UK's six major consumer debt help organisations StepChange, PayPlan, National Debtline, the Debt Advice Foundation, the Money Advice Service, and Citizens Advice.

What happens to my car?

As long as you keep up the repayments on your car, you continue to drive it just as you normally would.

However, if you default, the finance company may choose to sell your car in an attempt to cover the outstanding amount left on your loan.

If the amount raised at sale is less than the arrears remaining on your account, you may still owe the company money. They may choose to pursue a County Court Judgement against you if there is an outstanding balance following a sale which is not then repaid by you in full.

If the amount raised at sale is more than the outstanding balance, you should check the terms and conditions of the credit agreement to see how much (if any) of that surplus will be returned to you.

Many people do not like the idea of risking the use and the possession of their car in order to get a loan. You may wish to consider alternative options instead if your car is vital for work and family reasons.

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Representative Example: Amount of credit: £1200 for 18 months at £90.46 per month. Total amount repayable of £1628.28. Interest: £428.28. Interest rate: 49.9% pa (variable). 49.9% APR Representative. We’re a fully regulated and authorised credit broker and not a lender