Logbook loans, also known as car loans, are loans secured on your vehicle. The lender owns your vehicle until you pay the loan back. You can keep on using your vehicle as long as you repay the loan. Logbook loans allow you to borrow a sum of between £500 and £50,000, although some lenders will only allow you to borrow up to half the value of the car.

You will need your vehicle’s logbook or vehicle registration to take out a logbook loan. These prove that you are the registered keeper of the vehicle. You also need to be over the age of 18.

Logbook loans are available in England, Wales and Northern Ireland. Scotland does not offer a logbook loan service so if you are offered something that looks like a logbook loan, it’s most likely to be a hire-purchase or a conditional sale. as always, make sure you have a thorough understanding of what is involved in this type of deal before signing on the dotted line.

With a logbook loan, as well as signing a credit agreement there is a separate form called a “bill of sale.” What this means in layman terms is that the lender temporarily owns your vehicle. However, you’re still able to use it so long as you meet all the loan repayments. The law only recognises a bill of sale if the lender registers it with the High Court. If it’s not registered, the lender must get a court’s approval to repossess your vehicle. You could check if a bill of sale is registered by making a written application to the Royal Courts of Justice in London but bare in mind that there is usually a fee to pay.

Once you have applied for a logbook loan, and have been accepted: The lender will ask you to sign a bill of sale which gives them authorisation to sell the vehicle if necessary. They will also want to inspect the car and see documentation including: Your V5C registration document Proof of insurance Proof of tax The transferal of money will then be done via check, or less commonly, BACs.

Most companies will deliver the money into your account electronically, occasionally this process can be expedited. However, companies might charge up to 4% of the loan for doing this.

The cost depends on: The amount you want to borrow The value of the vehicle How much the value of the car will deteriorate over time Your credit record However, in general, the Typical Annual Percentage Rates are 400% or higher making it an extremely expensive form of credit.

You can apply for a logbook using a: Car Motorbike Van HGV Caravan Motorhome Boat Plane

In general you can borrow up to 50% of the worth of the vehicle, although some lenders may offer more than this. The sum will also depend on your income, credit history and current borrowing.

The majority of logbook loans last for 78 weeks, although by law you are able to pay this off earlier if you have the want and the ability to do so. In certain circumstances, you might only be repaying the interest charges until the very last month of your contract whilst in the final month you will be expected to repay the amount of money you originally borrowed.

This depends on the terms of the lender, and will either be due weekly or monthly. Certain lenders will allow you to pay the interest only, for the the length of the loan. After this time the amount of the original payment is due.

Repossession: If you are unable to make the repayments you may well lose your car. Protection: With this sort of loan you are not entitled to the same type of protection as other hire purchase agreements. Conditions: There are a number of conditions on a logbook which mean you have to be the legal owner of the car and have absolutely no finance outstanding on it. Expensive: In general, typical annual percentage rates are 400% higher than the national average so it can be a rather expensive form of credit. Payments: Some logbook owners won’t accept direct debits and will insist upon weekly payments which means you have to be incredibly disciplined with your repayments.

Flexibility: They don’t necessarily need to be used to pay for a car, in essence you could spend the money on anything you like. Credit Record: A logbook loan is one of the only loans that doesn’t appear on your credit record. Although if you are unable to pay it back, it will then affect your record. Instant Credit: A logbook loan can often act as an incredibly quick and effective way of accessing money. Small weekly repayments: These can often be easy to manage without being too much of a burden on your finances. No Credit Checks: With a logbook loan you are often able to borrow money without having your credit score checked. Repayments: You are able to pay off a logbook loan early without having to pay a fine.

The APR is extremely high so it’s worth paying it off as quickly as possible. There could possibly be some additional charges on early repayment if you pay back more than £8,000. Logbook lenders may request weekly repayments. However, they may not take Direct Debit so it is difficult to know precisely how much you owe. If you are ever uncertain as to how much you owe, you are able to ask for a statement of account, which a lender is required by law to give you. The amount you are able to borrow depends entirely on the value of your which should be valued independently. If your vehicle already has finance on it, it may be possible to get a logbook loan. However, this is only the case if your existing loan agreement is running out and the outstanding amount is low.

If you are unable to repay your logbook loan, a lender has the right to employ bailiffs to take possession of your vehicles. However, before they do this they must first send you a default notice and you will have 14 days to respond. Not only that but most lenders won’t sell your car until you have fallen behind on a number of repayments.

Even if the vehicle is sold you are still liable to pay back the shortfall and a lender is able to take you to court to retrieve this money.

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