Logbook loans

Logbook loans are available in England, Wales and Northern Ireland and use your vehicle as security. This means:

• the lender temporarily owns your vehicle 
• you can still use the vehicle if you meet all loan repayments 
• you won’t be able to sell the vehicle until the loan is repaid. 

The amount you can borrow depends on how much your car is worth and the lender’s rules. For example, some firms only lend up to half of your vehicle’s value. Typically, this means you can borrow between £500 and £50,000.  

You’ll sign a credit agreement and a ‘bill of sale’, which the lender must register with the High Court. If it’s not registered, the lender must get a court’s approval to repossess your vehicle. 

You can check if a bill of sale is registered by making a written application to the Royal Courts of Justice in London, but you’ll usually have to pay a fee. National Debtline has more information about how to check if a bill of sale is registeredOpens in a new window

Logbook loans aren’t available in Scotland as a bill of sale isn’t seen as legally binding. However, you might be offered a hire-purchase agreement or a conditional sale. These are regulated financial products so you’ll have protection under the Consumer Credit Act. 

As with any finance agreement, it’s important to check any documentation carefully so you are fully aware of what’s involved. 

Typical Annual Percentage Rates (APRs) are 400% or higher, so it’s an expensive way to borrow. 

For example, if you borrowed £1,500 and paid £55 a week for 18 months, you’d repay over £4,250 in total. That’s more than £2,750 in interest to borrow £1,500. 
 

To qualify, you need to be the legal owner of the vehicle – worth over £500 and usually with no existing car finance on it.

The main disadvantages of logbook loans include:

• Losing your vehicle if you can’t pay the loan company.
• High interest charges – usually more expensive than personal loans from mainstream lenders. 
• Not having the same consumer protections as with a hire purchase agreement.

Logbook loans can seem tempting if you need cash fast and other lenders won’t lend to you, but there are alternatives. 

• Check you’re getting all the benefits you’re entitled to. Find out about other sources of income and support available in Ways to boost your income. 

• Interest-free budgeting loan. If you’re getting certain benefits, you might be able to get a loan from the government. See if you qualify in our guide to Budgeting loans and advances.   

• Salary Advance schemes. If you’re employed, your employer might allow you take some of your pay early. You usually pay a one-off fee and your salary is reduced on payday to pay it back. Full help in Salary Advance explained.   

• Credit union loans. First try an eligibility checker to see if you’re likely to be accepted for a personal loan. If you’re struggling to find a lender that way, you could try contacting a credit union to check their qualifying criteria for a loan.

Here are some things to be aware of before applying for a logbook loan:

• How much you can borrow depends on the value of your vehicle, so a reputable lender will ask you to get it independently valued.
• If your vehicle already has finance against it, you’ll need to get permission from your existing lender before applying for a logbook loan. 
• Some lenders ask for weekly payments rather than monthly.
• If the lender doesn’t accept payment by Direct Debit, you’ll need to make manual payments. To keep track of how much you owe, you can ask your lender for a ‘statement of account’. 
• There might be extra charges if you want to end the loan early and you’ve repaid more than £8,000 in the last 12 months.

If you’re thinking of using a logbook loan to repay other debts, speak to a free debt adviser instead. 

Most logbook loans run up to 18 months, although by law you can choose to pay it off earlier. It’s important to make sure you understand how the agreement operates and that you can afford the repayments. 

You might be able to agree to only repay the interest each month, which means you’ll need to repay the full amount borrowed in the final month. If you do this, make sure you know how you’ll repay this lump sum. 

Lenders can use bailiffs to seize and sell your vehicle if you fall behind on several repayments. If the bill of sale has been registered, the logbook loan lender doesn’t need to go to court to repossess your vehicle. 

Before this happens, you must be sent a default notice. You then have 14 days to make any missed payments. It’s a good idea to use our Debt advice locator tool at this point, to find free debt help and understand your options.  

If your vehicle sells for less than the amount you owe, you’ll need to pay back the rest. A logbook loan company can take you to court to get this money back.

Dyma rai pethau i fod yn ymwybodol ohonynt cyn gwneud cais am fenthyciad llyfr cofrestru:

• Mae faint y gallwch ei fenthyg yn dibynnu ar werth eich cerbyd, felly bydd benthyciwr dibynadwy yn gofyn i chi ei brisio'n annibynnol.
• Os oes gan eich cerbyd gyllid yn ei erbyn eisoes, bydd angen i chi gael caniatâd gan eich benthyciwr presennol cyn gwneud cais am fenthyciad llyfr cofrestru.
• Mae rhai benthycwyr yn gofyn am daliadau wythnosol yn hytrach na misol.
• Os nad yw'r benthyciwr yn derbyn taliad drwy Ddebyd Uniongyrchol, bydd angen i chi wneud taliadau â llaw. I gadw golwg ar faint sy'n ddyledus gennych, gallwch ofyn i'ch benthyciwr am 'ddatganiad cyfrif'.
• Efallai y bydd taliadau ychwanegol os ydych am ddod â'r benthyciad i ben yn gynnar a'ch bod wedi ad-dalu mwy na £8,000 yn ystod y 12 mis diwethaf.

Os ydych chi'n ystyried defnyddio benthyciad llyfr cofrestru i ad-dalu dyledion eraill, siaradwch â chynghorydd dyledion am ddim yn lle.