Our frequently asked questions are designed to help answer all your questions relating to logbook loans and help you get the information you need. For any more questions, feel free to contact us here.
What is a logbook loan?
A logbook loan is similar to a car loan, bike loan or van loan. You have to own the vehicle and you are using it as security in order to borrow up to £50,000. It gets the name ‘logbook’ because this is the document which confirms that you are the registered keeper of the vehicle and part of the application process means you have to show this to lender to be eligible.
Does this mean the lender owns my vehicle?
Only temporarily. When you apply for a logbook loan, the vehicle’s ownership is transferred to the lender through a ‘bill of sale.’ You hand over your logbook temporarily to the lender and they give you money upfront for this. What this means they keep hold of it so you cannot repay your debt, they will be able to sell your car to recover theirs.
Can I apply with bad credit, IVAs and CCJs?
Yes, absolutely, the logbook loan industry caters for those with bad credit who may have been declined by mainstream finance (such as personal loans). For this reason, the rates charged a higher than average with personal loans at around 3% to 10% but logbook loans starting at 89% Representative APR.
Although you may have had an IVA or CCJ in the past, you can still release the value of your vehicle in order to get the funds your need. Other factors that will influence your application are the value, age and condition of the vehicle, your income and affordability.
Do logbook lenders run credit checks?
No, the majority of logbook lenders do not carry out credit checks. This is because they use the value of your car as security and realise that if your credit is not great, they have the option to repossess the car, bike or van to recover the costs.
How much can I borrow?
Logbook lenders offer loans between £500 and £50,000 with some able to lend up to £100,000. The maximum amount you can borrow is 70% of your vehicle but this assumes it is in good condition, fairly new and has an average or low mileage.
What other checks are involved?
A typically application will require you to fill in your details including name, age, residence and debit card details. You need a debit account since this is where the funds are transferred to. In addition, you will need a working mobile phone and email address to complete an electronic verification and so that you can be contacted in the future.
In terms of affordability checks, lenders will require you to confirm your income and this may involve proof via payslip or bank statement. You may also need to show proof of address and a valid MOT certificate.
What happens if I default?
Traditionally your car or vehicle that is used as security may be repossessed by the loan company in order to recuperate the funds that they lent you. This is a last resort, however, as they will always contact you by email, phone and text first within the regulated number of times to avoid overwhelming you. There will always be a period to allow you to repay your debt, even offering payment plans and arrangements to pay to help you clear the account in small amounts over longer period. However, if all correspondence fails and you do not respond, or equally the repayment plans fail too, it will get to a point where repossession is the only option.
Other things to consider include additional fees for default such as one-off fees, added daily interest for extending your loan and damage to your credit score for going into arrears.
What vehicles are accepted for logbook loans?
All road vehicles are generally accepted for logbook loans, provided that you own it. This includes:
- classic cars
As mentioned above, having vehicles that are relatively new, in good condition, low or average mileage can contribute to being approved and getting the maximum amount you wish to borrow.