How Logbook Loans Work

As more borrowers are refused a personal loan because of bad credit, quick cash alternatives such as logbook loans become even more popular in the UK. Advertised as an accessible and fast solution to your financial needs, it’s no surprise why logbook loans lure more and more customers to apply for the financial product.


If you’re among the thousands of borrowers who are planning to turn your vehicle into cash, this guide to logbook loans should help you better understand how the financial product really works.

Defining Logbook Loans

Logbook loans, as its name implies, are personal loans that require a vehicle for collateral or security. The loan will be secured against your vehicle hence the larger loan offers. In general, lenders can lend you money between £500 and £50,000 or up to 70% of your vehicle’s official trade value.

If approved for a logbook loan, this means that temporary ownership of the vehicle involved has been transferred from the borrower to the lender. The borrower is required to sign a debt agreement and “bill of sale”, which detail the terms of the loan. You can continue to use your car but the lender now as the right over said vehicle.

Eligibility Criteria for Borrowers

For borrowers to avail a logbook loan, he or she must meet the eligibility criteria. Unlike traditional personal loans, the requirements for borrowers are pretty basic. You just need to meet the following requirements in order to avail a logbook loan:


  • You must be at least 18 years old.
  • You must be a UK resident.
  • You must be a vehicle owner.
  • You must provide proof identification, income and proof of billing address.
  • You must also provide key documents such as logbook document of the vehicle involved, MOT certificate, insurance details and tax details.

If you meet the eligibility criteria, you are welcome to apply for a logbook loan, get approved within the same day and receive the cash right away via wire or bank transfer.

Cost of a Logbook Loan

The average representative APR for logbook loans is set at 400%. Compared with other personal loans, logbook loans are quite expensive. Fortunately, more lenders are now offering cheaper deals. Some lenders offer deals with representative APR of 180%. If you want to borrow £1,000, for example, and you want to repay it over 18 months, you’ll be repaying £113.89 per month or a grand total of £2,050. This is considering that the APR is fixed at 180% and the per annum interest rate is also fixed at 70%.

As you can see, you’ll end paying a whopping £1,050 just for interest and related charges alone. If you want a cheaper deal, look for one with the lowest APR. For a more in depth look at APR, just click here.

Potential Risks Involved

Because logbook loans are secured loans, the risks are higher than if you avail an unsecured loan. With secured loans, you’re essentially putting your security at risk in exchange for the larger loan amount. In the case of a logbook loan, you’ll be putting your vehicle at risk. There’s always the possibility of losing your car to your lender if you can no longer repay the loan.

Fortunately, repossession is generally the last resort lenders have to do in case of nonpayment. If you miss repayments, a debt collector will be sent out. If you can’t still repay the loan and you fail to respond to your lender’s reprimands only then will the lender carry out vehicle repossession. To avoid such risks, make sure you commit to repay your logbook loan on time every month.