What Is a Logbook Loan? How Can a Logbook Loan Help You?


Ignatius Uirab

Money Savings Advice What is a logbook loan

You can only apply for a logbook loan if you have a vehicle to offer in exchange. You’ll get to keep the vehicle as long as you keep up with repayments. If you can’t repay your loan, the lender has a right to claim your car.

What Is a Logbook Loan?

A logbook loan is secured against your car. If you can't get approved for an unsecured loan, a logbook loan might be an option - but if you can't keep up repayments, you might have your car repossessed.

Logbook loans are an option if your credit score is relatively low. You may not be approved for an unsecured loan because you’re considered a risk. If you want to increase your chance of approval, applying for a logbook loan shows that you have a way to pay back what you owe.

You must be prepared to give up your car if you can’t clear your debt another way.

Read on to learn more about logbook loans and who might benefit from borrowing this way.

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Logbook Loans: What Are V5 Loans?

V5 loans are the same as logbook loans. The V5C document is your vehicle’s logbook and shows the registered keeper.

Your vehicle is a financial asset. It’s worth money, and you can use the value of your car to back a loan application. Lenders are more likely to approve your application if you’re offering your car as security.

If you can’t repay your loan, the lender is entitled to ownership of your vehicle. If you make all your payments on time, you’ll get to keep the car. In most cases, you’ll continue to use your vehicle whilst the loan is in place. Most lenders don’t take the car unless you’ve fallen behind with your repayments.

A logbook loan can be helpful if you can’t get approval for an unsecured loan. This might be the case if your credit score is poor and lenders think of you as a risk. If you’re choosing to apply for a logbook loan, you must be aware that you’re taking a risk and stand a chance of losing your vehicle.

Logbook Loans: Logbook Loans for Older Cars

Lenders will calculate the value of your car when they’re approving your loan. The more valuable your car, or other vehicle, the more money you’re likely to be offered.

Lenders want to be sure that they’ll get their money back if you can’t keep up with repayments. They’ll need to know how much your car is worth, and how much they’ll be able to sell it for.

Having an older car doesn’t mean that you won’t be approved for a loan. There are logbook loans for older cars, but for much smaller amounts of money. Some lenders will offer as little as £50 secured against the value of your vehicle.

Instant Decision Logbook Loan

When it comes to logbook loans UK lenders often act quickly. These loans can be used when you’re in a hurry and need emergency cash.

In many cases, you can get an instant decision on a logbook loan application.

You can apply for a logbook loan online, which means you can get logbook loans with no phone calls involved. Lenders can run an automatic valuation to find out the value of your car. You’ll need to provide identification to prove that you’re who you say you are.

When you apply for logbook loans online, instant decision lenders will let you know if your loan application is approved. In many cases, the money will reach your account in less than 24 hours.

How Popular Are Logbook Loans?

Logbook loans are usually a last resort for anyone and with that in mind, they aren’t as popular as other forms of credit. Indeed it tends to be the least-used form of credit by customers, as these statistics from 2017 show:

Type of Credit Number of Customers
Credit Card 31,600,000
Overdraft 12,900,000
Personal Loan 6,300,000
Catalogue credit 4,500,000
Payday Loan 600,000
logbook loan <100,000

The above doesn’t include every form of credit available and is representative. See the full table (where Logbook loans are still bottom) here: FCA Financial Lives Study in 2017.

Logbook Loans on Benefits

Because logbook loans are secured against your vehicle, your income doesn’t sway the decision. Lenders only need to know that they’ll get their money back, not where your income comes from.

Lenders will usually ask for proof of income, but this doesn’t need to be a pay slip. If you don’t work, your benefits statements are just as valid in the eyes of these lenders.

Logbook Loans Unemployed

You must be able to demonstrate that you’re able to repay your logbook loan. Lenders know that they can take your vehicle if you don’t keep up with repayments, but it’s understandable that they would rather not go down this route.

If you’re unemployed, your unemployment benefits can be classed as your regular income. Many lenders will approve car logbook loans upon seeing a benefits statement.

Selling Cars With Logbook Loans

You might be wondering ‘Can I sell my car if I have a logbook loan on it?’. Whilst you have outstanding loans attached to your car, it isn’t yours to sell. When you have a logbook loan, the vehicle belongs to the lender until your debt is cleared.

If you did sell the car with a logbook loan, the vehicle may be repossessed. Lenders would take the car straight from its new owner, who could then take legal action against you.

If you need to sell your car, you must make sure that your loans aren’t secured against it. If you’re struggling to repay what you owe, seek help before selling your vehicle.

Who Are Logbook Loans Best For?

If you can get an unsecured loan, this is usually better. Unsecured loans don’t require you to risk a valuable asset. If you default on an unsecured loan, you won’t lose something important like your car or your property.

If your credit score is low, you may not be approved for other types of loan. Here, your car can be a valuable tool that helps you to get what you need. As your loan will be secured against the value of your car, your chance of approval is higher.

Logbook loans can provide a solution for the unemployed and those with poor credit.

You shouldn’t apply for a logbook loan if your car is absolutely essential. If losing your car would stop you getting to work, it’s not wise to risk it for a loan. You might believe that you’ll keep up with repayments, but anything could happen through your loan term.

Alternatives to V5 and Logbook Loans

There are many alternatives to logbook loans, all with their own benefits and drawbacks. If you need a small loan, you might consider a pawnbroking service for something less important than your car. If your credit rating is average at least, you may be able to get unsecured loans. You might also like to consider using an overdraft attached to your bank account.

It makes sense to consider all your options before you make a final decision. You may decide that a logbook loan is best, but should make sure that you understand the risks of securing your loan against your car.

How Can Money Savings Advice Help You With Getting a Loan?

Here at Money Savings Advice, we have partnered with some of the UK’s leading loan broker companies. They have already helped thousands of people get the best loan that suits their needs, and they can do the same for you.

Choosing an independent loan broker means they won’t proceed with an application unless they are sure it is in your best interests. They are also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these loan brokers who can help you get a loan, then click on the below and answer the very simple questions.



Ignatius Uirab

Ignatius is one of our leading financial specialists. With over eight years of financial experience, he has vast experience and knowledge of the financial sector. When he is not writing about how to make your money go further, he is a true family man.

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