The Complete Guide to Logbook Loans

One of the quickest ways to raise the cash that you need for whatever purpose is by using your vehicle as security or collateral. Taking out a logbook loan is especially favorable for people with bad credit. Because bad credit means high risks for major lenders such as banks, rejection is a common scenario. If you've ever been refused a loan before, you know exactly how difficult and full of hassles the process can be.
Fortunately, logbook loans make an ideal alternative for quick cash needs. But first, it is imperative to understand how the financial product works and this guide will help you do just that.

Defining Logbook Loans

Logbook loans are personal loans that can be short term or long term offered for borrowers across UK. The financial product is currently one of the most availed loan types online particularly for those with bad credit. To be qualified, you need to own your car legally. Just like with homeowner's loans in which a home becomes a security, your car will serve as security for the loan.

Loan Amount and Terms

Logbook loans offer one of the more flexible loan amounts in the lending industry today. Provided that you meet the loan requirements, you can borrow between £500 and £50,000 for whatever purpose you have in mind. The reason can be as simple as paying bills, car repair or medical emergencies. It can also be because of a major expense like home renovation, car purchase or paying for school tuition.
With respect to the repayment terms, the typical duration is from 3 months to 5 years. As the borrower, you can set it accordingly and tailor it to your budget.

Representative APR

When it comes to the financial product's cost, one of the things to investigate is the Representative APR. APR, which stands for annual percentage rate, will tell you if your logbook loan option is cheaper than other deals. It is basically your gauge to your choice's cost.
The average Representative APR for logbook loans online is around 400%. It can be less or more depending on your lender. Ideally, you should go for options with the lowest APR if want cheap and affordable. However, APR shouldn't be the only deciding factor. You must also consider hidden fees and other charges to get a bigger picture of the cost.
To better understand APR, click here for more information.

Eligibility Criteria

To be eligible for a logbook loan, you don't have to worry about bad credit but you must be 18 years of age or older, a resident of UK and a car owner. The vehicle must be less than ten years of age and is free or nearly free of any financing. You can borrow up to 50% of your vehicle's official trade value but approval is subject to other factors such as your income.
To hasten the processing, you can prepare the following documents beforehand:


  • V5 or logbook document of the vehicle
  • MOT certificate
  • Proof of identification with recent photo
  • Proof of income (e.g. pay slip)
  • Billing address

The Risk

Since your car is used as security, the biggest risk with logbook loans is repossession. This is usually the last resort for lenders prompted by missed payments for several months and lack of response on your end. Once the car has been repossessed, the lender has the right to sell the vehicle to cover for your outstanding balance. You still need to pay the remaining balance that was not covered by the sale.