Logbook Loans

Logbook loans are a popular form of lending that can allow you to purchase a car with a loan that is secured against the value of the vehicle. But whilst they can be a convenient way to purchase a car when you’re not in a position to buy it outright, they can also be a slippery slope to debt if you can’t afford to keep up with your repayments.

In this guide, we’ll cover logbook loans in more detail and provide some top tips for dealing with logbook loan debt.


Logbook loan debt can become a burden for individuals struggling with unaffordable repayments.

Logbook loans are a form of secured lending where the borrower uses their vehicle as collateral. This type of loan allows individuals to access funds based on the value of their vehicle.

If borrowers fall into arrears and cannot keep up with the repayments, logbook loans can lead to significant consequences.

In this article, we explore what logbook loans are, how they work, the potential risks of falling into arrears, and the available debt solutions in the UK for dealing with unmanageable logbook loan debt.

What is a logbook loan?

A logbook loan is a type of credit agreement available in England, Wales, and Northern Ireland, where individuals can borrow money using their vehicle as collateral.

With a logbook loan, the borrower transfers the ownership of their vehicle’s logbook (V5C registration document) to the lender while retaining possession and use of the vehicle.

The loan amount is typically based on the value of the vehicle, and the borrower makes repayments, including interest, over an agreed-upon period.

Once the loan is repaid in full, the logbook is returned to the borrower.

How do logbook loans work?

Logbook loans work by providing individuals with access to credit using their vehicle as collateral.

The process of securing a logbook loan typically works as follows:

Compare logbook loans and find a logbook lender

Research and compare different logbook loan providers to find the one that offers favourable terms and conditions.

Consider factors such as interest rates, repayment terms, and customer reviews.

Sign a personal loan agreement

Once you have chosen a logbook lender, you will need to sign a personal loan agreement.

This document outlines the terms of the loan, including the loan amount, interest rate, repayment schedule, and any additional fees or charges.

Transfer ownership of your vehicle through a bill of sale

To secure the loan, you will transfer the ownership of your vehicle to the logbook lender through a bill of sale agreement.

This gives the lender legal rights over the vehicle during the loan term. However, you can still continue to use the vehicle as long as you meet the loan repayments.

Make logbook loan repayments

Repayments on logbook loans are typically made in regular installments over the agreed loan term.

It is crucial to make timely payments to avoid default and potential repossession of the vehicle.

Failure to repay the loan may result in additional fees, charges, or legal actions by the lender.

Be wary of missed payments

If you encounter difficulties in meeting the repayments, it’s important to communicate with your logbook lender as soon as possible.

They may be able to offer alternative repayment arrangements or solutions to help you avoid falling into arrears.

However, be cautious as missed or late payments can have serious consequences, including the risk of vehicle repossession and additional charges.

Why do people turn to logbook loan companies?

Logbook loans tend to be the last resort, often used by people who have been unable to secure a loan from any other lenders.

Many companies will not conduct a credit check for this type of loan, making it a popular option for those struggling to obtain credit.

However, a loan such as this can be very expensive and can come with interest rates as high as 450%.

This type of loan is often used by people struggling to pay back other debts or to cover the cost of an emergency or unexpected payment.

What’s the difference between a logbook loan and a hire purchase agreement?

The main difference between a logbook loan and a hire purchase agreement lies in the ownership of the asset and the nature of the agreement:

Ownership of the asset

In a logbook loan, the borrower retains ownership of the vehicle but transfers the ownership of the vehicle’s logbook (V5C registration document) to the lender as collateral.

The logbook loan lenders hold the logbook until the loan is repaid.

On the other hand, in a hire purchase agreement, the lender retains ownership of the asset, such as a vehicle, throughout the duration of the agreement.

The borrower effectively hires the asset from the lender and gains ownership rights after completing all the required payments.

Legal status

Logbook loans are regulated as bills of sale in England, Wales, and Northern Ireland. The lender has a legal right to repossess the vehicle in the event of non-payment.

On the other hand, hire purchase agreements are regulated by the Consumer Credit Act and offer some legal protection to borrowers, including the right to terminate the agreement and return the asset under specific conditions.

Repayment structure

Logbook loans typically involve monthly repayments of the loan amount plus interest over an agreed term.

In a hire purchase agreement, the borrower pays fixed monthly installments that cover both the cost of the asset and the interest. Once all the payments are made, the borrower becomes the outright owner of the asset.

What happens if you end up in arrears to a logbook loan company?

If you fall into arrears with your logbook loan repayments, several consequences can occur:

Contact from the logbook loan lender

The logbook loan lender may initiate contact to discuss the missed payments and seek an arrangement to bring the account up to date.

They may send reminders, letters, or make phone calls to remind you of the outstanding debt.

Logbook loan default notice

If you continue to miss payments, the logbook loan lender may issue a default notice. This notice formally informs you that you have breached the terms of the loan agreement and that the lender may take further action to recover logbook loan debts.

Logbook loan repossession

In extreme cases of persistent non-payment, the logbook loan lender has the right to repossess your vehicle.

As the vehicle was used as collateral for the loan, the lender can legally take possession of the vehicle to recover the outstanding debt.

Repossession typically occurs as a last resort when all other attempts to resolve the debt have been unsuccessful.

What should I do if I can’t afford to repay logbook loan debt?

If you find yourself unable to afford the repayments for your logbook loan debt, there are several steps you can take:

Contact your lender

Initiate communication with your logbook loan lender as soon as possible to explain your financial difficulties.

They may be willing to work with you to find a solution, such as restructuring the repayment plan or temporarily reducing the payments.

It’s essential to keep the lines of communication open to explore possible options.

Try to renegotiate your payment arrangement

Discuss the possibility of renegotiating the terms of your logbook loan with your lender.

This could involve extending the loan term to reduce monthly payments, adjusting the interest rate, or exploring alternative payment arrangements.

It’s important to express your willingness to meet your obligations and find a mutually agreeable solution.

Get free debt advice

Seeking free debt advice from reputable organisations can provide you with valuable information and support.

Debt advice services, such as Citizens Advice Bureau or StepChange Debt Charity, or reliable debt management companies, can all offer guidance tailored to your situation.

They can help you understand your rights, explore debt management options, and assist in negotiating with your logbook loan lender.

Consider using a debt solution

If your logbook loan debt, along with other debts, becomes unmanageable, exploring debt solutions may be necessary.

Debt solutions such as a Debt Management Plan (DMP) or Individual Voluntary Arrangement (IVA) could help you manage your debts more effectively.

These solutions involve restructuring your repayments based on your financial circumstances and making affordable payments over a set period, with an IVA even allowing you to write off a portion of your total debt.

Where can I get logbook loan debt help?

If you’re struggling to manage your logbook loan repayments, taking proactive steps and seeking the right support can help mitigate the impact and prevent further complications resulting from logbook loans debt.

That’s where Talk About Debt comes in. As UK debt specialists, our trained debt advisors can assess your situation, provide personalised guidance, and recommend the most appropriate course of action to tackle your logbook loan debt and other financial challenges.

For debt advice and more information on how we can help you regain control of your finances, get in touch with us today.

Key Takeaways

Logbook loans are typically used by people who have been unsuccessful in securing a loan from other lenders

With a logbook loan, the borrower retains ownership of the vehicle but transfers ownership of the vehicle's logbook to the lender as collateral

Your lender may add additional fees and charges or resort to legal action if you fail to keep up with the repayments for your logbook loan

There can be serious consequences for falling into logbook loan arrears and, in extreme cases, your vehicle may be repossessed

Always contact your lender and try to negotiate a payment plan if you find yourself unable to afford the repayments for your logbook loan