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Logbook Loans

Unlocking the Realities of Logbook Loans

Unlocking the Realities of Logbook Loans:

In times of financial strain or unexpected expenses, many individuals find themselves exploring various lending options. One such option, often considered a last resort due to its associated risks and high costs, is a logbook loans. We delve into the intricacies of Logbook Loans, how they work, their costs, eligibility criteria, safety considerations, and alternative avenues for borrowing.

What is a Logbook Loan?

A logbook loan is a type of secured lending where the borrower uses their vehicle as collateral. The term “logbook” refers to the V5C registration document issued by the Driver and Vehicle Licensing Agency (DVLA) in the United Kingdom. Essentially, the borrower hands over the vehicle’s logbook to the lender, granting them temporary ownership rights while the loan is outstanding.

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How Do Logbook Loans Work?

The process of obtaining a logbook loan typically involves several stages:

    • Applying: Prospective borrowers apply to a logbook loan provider, detailing their personal information, vehicle details, and loan amount desired.

    • Signing a Bill of Sale: Upon approval, the borrower signs a bill of sale, transferring temporary ownership of the vehicle to the lender. This legal document grants the lender the right to sell the car if the borrower defaults on the loan.

    • Sending Documents: The borrower must provide supporting documents, including proof of identity, vehicle ownership, insurance, and MOT certification.

    • Repaying the Loan: Logbook loans typically come with short repayment periods, often ranging from a few months to a couple of years. Repayment schedules and amounts are agreed upon at the outset of the loan.

Are Logbook Loans Expensive?

Logbook loans are notorious for their high cost, primarily due to exorbitant interest rates. According to Money Helper, the Annual Percentage Rate (APR) on logbook loans can soar to 400% or higher. Making them one of the most expensive forms of borrowing available. Borrowers can quickly find themselves trapped in a cycle of debt if they are unable to meet the steep repayment demands.

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How Much Can You Borrow with a Logbook Loan?

The borrowing limit for a logbook loan hinges on your vehicle’s value and the lender’s criteria. Lenders extend loans ranging from £500 to £50,000, but the amount you can borrow is restricted to a portion of your vehicle’s total worth. The specific loan amount offered will be contingent upon the assessed value of your vehicle and the lender’s guidelines.

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Paying Back Logbook Loans

Paying back logbook loans typically entails a repayment period of around 78 weeks or 18 months, although terms can vary. Early repayment is usually allowed by law, but borrowers should be aware of potential charges. Understanding payment terms is crucial. Repayment schedules may involve weekly or monthly instalments.

Some agreements may feature smaller interest payments throughout the term. Culminating in a larger final payment to clear the outstanding capital. It’s essential for borrowers to devise a plan to manage this final amount effectively.

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How to Get a Logbook Loan?

To qualify for a logbook loan, individuals must meet specific criteria:

    • Age Requirement: Applicants must be over 18 years old.

    • Residency: Borrowers must reside in England, Wales, or Northern Ireland.

    • Vehicle Ownership: The applicant must be the legal owner of the vehicle and listed as such on the vehicle’s logbook (V5C).

    • Vehicle Conditions: The vehicle must be taxed, fully insured, and have a valid MOT certificate.

Are Logbook Loans Safe?

Despite their accessibility, logbook loans pose significant risks to borrowers. The Financial Conduct Authority (FCA) and financial guidance services like Money Helper advise against their use due to their high costs and the threat of repossession. Defaulting on a logbook loan can result in the loss of one’s vehicle, leading to severe financial consequences.

What happens if I can’t repay a logbook loan?

If you find yourself unable to repay a logbook loan, it’s crucial to take immediate action. Upon missing a repayment, the lender will issue a default notice, granting you 14 days to rectify the missed payment. Ignoring this notice or failing to address your debt situation can exacerbate the issue. It’s advisable to communicate with the lender and seek debt assistance promptly.

Continued non-payment of repayments grants the lender the right to repossess your vehicle without needing court approval if a bill of sale has been registered. After repossession, there is a mandatory waiting period of at least five days (or 14 days for CCTA members) before the lender can sell the vehicle to recoup the owed amount.

In the event that the sale of the vehicle doesn’t cover the debt entirely, you remain responsible for the shortfall. Conversely, if the vehicle sells for more than the outstanding debt, the lender must reimburse you the surplus amount. Being proactive and seeking assistance can help mitigate the consequences of defaulting on a logbook loan.

Alternatives to Logbook Loans

For individuals seeking alternative sources of funding, several options offer more favorable terms and lower risks:

    • Personal Loans: Traditional personal loans from banks or online lenders often feature lower interest rates and longer repayment terms.

    • Credit Union Loans: Credit unions provide community-based lending services with more favorable rates and flexible terms.

    • Credit Cards: While carrying their risks, credit cards can offer a convenient source of short-term financing For more minor expenses.

    • Using Your Overdraft: Overdraft facilities provided by banks can offer short-term relief for cash flow shortages.

    • Borrowing from Family and Friends: A loan from a trusted friend or family member may come with more lenient terms and lower or no interest.

    • Budgeting Loans or Advances: Government-backed schemes such as budgeting loans or advances provide interest-free loans to individuals on certain benefits to help cover essential expenses.

Final Words

While logbook loans may seem like a quick fix for financial emergencies, their high costs and associated risks often outweigh their benefits. Borrowers must explore alternative options and seek financial guidance before committing to any form of lending, ensuring they make choices aligned with their long-term economic well-being. By understanding the intricacies of logbook loans and exploring alternative avenues, individuals can navigate the financial landscape more confidently and secure their financial futures.


Q1: How quickly can I get a Logbook Loan?

A: The approval process for a Logbook Loan can be quite fast, often within a few hours to a day, depending on the lender. Once approved, funds are usually disbursed quickly.

Q2: How do I apply for a Logbook Loan?

A: To apply, you typically need to provide your vehicle’s logbook, proof of income, identification, and possibly proof of address. The application can usually be done. Apply now

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