the complete guide to logbook loans

A logbook loan is a secured loan. They are secured to your car. It means you will be free to use your car the way you want, but your logbook loan provider will legally own the car until you settle the whole debt. However, if you miss a payment, your loan provider will repossess your car to recover their money.  

Logbook loans are mainly aimed at car owners. They come in handy when your credit rating is not stellar and you have been facing difficulty getting your loan approved elsewhere. It could be frustrating, especially when you need money urgently. If you own a car or a motorbike, you can borrow up to 70% of your vehicle’s value without discontinuation the usage of your vehicle.  

At the time of taking out a logbook loan, you will have to hand your lender your vehicle’s logbook. In addition, you will also sign a bill of sale in order to transfer ownership to your lender. You will have to observe the exact approach even if you are using logbook loans for older cars.  

Key facts about logbook loans 

• Logbook lenders will determine the market value of your vehicle and also find out if it is free from any other financial obligations and if you are a registered owner.  

• Lenders may also check your credit history in order to know whether you will keep up with repayments.  

• Logbook loans can be applied for online. You have to fill in the application form, and you will receive the decision in a couple of hours. Most of the time, money is sent to your account the same day you put in the application.  

• Logbook loans are only available in Wales, England, and Northern Ireland. Scotland does not provide logbook loans.  

Who can obtain a logbook loan? 

Here are the terms and conditions you have to meet in order to apply for a logbook loan: 

• You must have come of age.  

• You should be a registered landlord of your auto. 

Some lenders do not run a credit check, so you do not have to worry about having a bad credit score. It means if you have an extremely bad credit score and a CCJ, you still have a chance to apply for a logbook as long as you meet the aforementioned conditions. Make certain that you prove to your lender that you can maintain with repayments. You will find it difficult to have your logbook loan approved when you cannot repay the debt.  

The type of vehicle you can own I order to take out a logbook loan includes: 

• Cars, including older cars 
• Trucks 
• Vans 
• Motorbikes 
• Caravans 
• Boats

If your vehicle has already been secured against any other loan, no lender would accept your application for a logbook loan.  

How long do logbook loans last? 

Logbook loans are short-term loans, even though they are secured loans. The repayment length of these loans depends on the loan amount. The bigger the loan amount, the larger the loan repayment will be. Normally, the repayment term of these loans is between 12 and 36 months. Money you borrow through logbook loans can be utilised for a miscellany of reasons. Whether you need money for planned expenses or small emergencies, lenders will not put any restrictions on the usage of a logbook loan.  

What are the advantages and drawbacks of logbook loans? 

Here are the upsides and downsides of logbook loans: 

• Hassle free 

Logbook loans are hassle-free. You must have a logbook that you are to hand over to your lender, and sign a bill of sale. Once these formalities are done, your lender will decide how much money they can offer based on your repaying capacity. The approval is made the same day you submit the application form. 

• Bad credit does not get in your way 

The biggest benefit of logbook loans is that you can get approval despite your poor credit history. Logbook loans are not subject to a credit check, so you can get approval for these loans despite a very bad credit rating. You are suitable for these loans as long as you are a documented owner of your vehicle and you have a strong repaying capacity  

• High interest rates 

Even though logbook loans are secured, they carry very high interest rates. Personal loans are generally more expensive than secured loans, as the default risk is too high and lenders have no collateral to repossess to take their money back. Logbook loans are secured loans, and yet they maintain higher interest rates than personal loans. The APR of these loans could be up to 400%. 

• You will lose your vehicle 

Logbook loans are assured against your automobile. You sign the bill of sale to transfer the ownership to your lender. Unless the whole debt is paid off, you cannot obtain the ownership back. If you miss a payment, your lender has the privilege to repossess your motorcar.  

Your credit score will be ruined 

While logbook loans require no credit checks at the time of approving your loan application, it does not mean that missed payments will not ruin your credit score. Not only will you lose your vehicle, but your lender will also inform credit reference agencies of your default.  

What are logbook alternatives? 

Here are logbook alternatives: 

• Personal loans 

Personal loans are a better alternative because they carry lower interest rates than logbook loans. You can apply for either a £2,000 loan or a £5,000 loan, depending on your credit needs. These loans are paid down in fixed instalments too.  

• Guarantor loans 

If you are unable to qualify for a personal loan due to a bad credit rating, you should consider applying for a loan with a guarantor whose credit score is good.  

The final word 

Logbook loans can help you borrow money against your vehicle. As they are secured loans, they will allow you to borrow a large amount of money, but they are quite expensive. You should carefully weigh up the pros and cons while using these loans.