Beginner's Guide to Logbook Loans

Borrowing money is serious business. Personal loans can be tricky especially if it's your first time applying for one. There are so many loan products to choose from. It becomes even more complicated when you have bad credit history under your belt

Bad credit means your options are limited. Because lenders see you as a high risk borrower, you are likely to get a harder time getting approved for a personal loan. This is where products like logbook loans come in as an ideal alternative. Before you go on and apply for one, however, it is imperative to understand the product fully. Here is your beginner's guide to logbook loans:

What is a logbook loan?

A logbook loan, as the name suggests, is a type of secured personal loan which requires you to have a security in order to be eligible. For this type of loan, you need a car to serve as collateral against the loan. Lenders take your logbook loan and have temporary ownership of your car until the loan is fully repaid.

How much can I borrow?

Because there is a security involved, logbook loans offer higher loan amounts than other types of unsecured personal loans. Generally, you can borrower between £500 and £50,000 with a logbook loan. The financial product, therefore, makes an ideal financial solution to a range of financial needs including medical emergencies, investments, home renovation or repair and vacation.

How long is the repayment does term?

Repayment terms for logbook loans generally start from 3 months up to 3 years. Borrowers are required to pay on a monthly basis usually through automatic debit deduction from your account. Some lenders are now offering longer terms like 4 or 5 years which you can opt if you want lower monthly payment fees.

How much is the interest rate?

The average annual percentage rate (APR) for logbook loans used to be 400%. Some lenders, however, are now offer lower interest rates to keep up with the competition. There are lenders with Representative APRs of around 300.3% while others lure customers with even lower interest rate at around 132% Representative APR.

To illustrate, let's you borrowed £1,000 for a medical emergency payable over 12 months at a flat rate of 96% APR at 300.3%. You'll end paying a total of £1,960.08 by end of term. That means paying £163.34 per month for the next 12 months.Click here if you want to know more about APR

What are the requirements?

To be eligible for a logbook loan, you must meet the following requirements:

  • You must of legal age (18 years old or older).

  • You must be a UK resident.

  • You must provide proof of steady income.

  • You must own a car that is free of financing and is not more than 10 years old.


Some lenders may require more documents but in general, the four requirements above are what you need to meet in order to avail a logbook loan in the UK. To expedite the process, make sure to prepare the following the documents on hand:

  • V5 or logbook document

  • MOT certificate

  • Insurance details

  • Proof of identification

  • Proof of steady income

  • Billing address

What are the risks?

Like with any other type of personal loans, there are risks involved with getting a logbook loan. Because the loan type is secured on your vehicle, there is always the likelihood of repossession. In the event that you can’t keep up with the monthly repayments and you miss several months, your lenders have the option to repossess your car as per the debt agreement. If they have the bill of sale, the lender may also sell your car to cover for your outstanding balance.