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Logbook Loans Help & Advice

Debt is often described in negative terms. But borrowing money, or ‘taking on debt’, isn’t necessarily a bad thing. Manageable debts, that you can comfortably pay back over an agreed period, are often necessary in order to take that next step in life.

It’s only when debt repayments become unmanageable or unaffordable that debt becomes a problem.

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Logbook Loans

Logbook loans are a relatively new type of borrowing. Technically, they fall under the category of secured borrowing, but logbook loans don’t have the same level of consumer protection as the vehicle finance you might get from your bank or an established loan provider.

Logbook loans are typically used for smaller amounts of borrowing, but often at much higher risk than mainstream debt.

You may lose your vehicle, have a damaged credit score and still need to pay back the original loan amount, plus interest and charges.

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How do logbook loans work

If you need to borrow money, but can’t find a traditional lender, you may be tempted to take out a loan against your vehicle. In order to secure the debt, you hand over your vehicle’s logbook. ‘Logbook’ is the informal term for a Vehicle Registration Certificate, also referred to as the V5C form.

In short:

  • Hand over ownership of your vehicle
  • Receive the money
  • Continue to use your vehicle
  • Pay back the loan
  • Get the logbook back once the loan is cleared

You won’t be able to take out a logbook loan if you have any outstanding finance on your vehicle, or if you’re not already the registered keeper.

In most cases, you’ll still have use of your vehicle while you pay back the logbook loan debt, but the lender keeps the logbook until you’ve paid back the loan and could seize the vehicle if you miss a payment.

In some cases, the lender will make you sign a ‘bill of sale’ document which transfers ownership to them. Having the logbook and bill of sale document makes repossession very easy. This is a high risk form of borrowing, especially if you need your vehicle for work.

Common issues

it’s quite common for people to struggle to pay back a logbook loan because they’re likely to have other debt problems that drove them to consider a logbook loan in the first place. We never recommend using a logbook loan to pay off other debts.

Logbook loans are typically very expensive too. Interest rates may be as high as 450%. They are usually a loan of last resort for people who can’t access other forms of finance, but given the high cost and high risk, we don’t advise that you take one out, even if you have other pressing debt problems. There’s always another way.

Consumer protection against logbook loan debt

Logbook loans rarely have the same degree of consumer protection as other vehicle finance options, and many have additional early repayment fees and other charges built in. The loan provider is able to take action following any defaults and can call in bailiffs, sometimes without having to apply to a court.

If you’re thinking about using a logbook loan as a way out of debt, you should talk to Creditfix first.

Call us now for immediate and confidential free debt help on or complete the form.  We can start to work through your debt problems as soon as you contact us. Our advisors are trained to give you the best advice for your situation.

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