Best Logbook Loans Compared
Compare the best deals, and learn about how to use your car to get a loan.
Logbook Loans – Fast Facts:
Get to know the facts about logbook loans:
- Use your car to get a great loan.
- A type of secured loan.
- Loan provider temporarily owns the rights to your car.
- Must own your own car.
- You still use the car day to day, the official ownership is all that changes.
- Borrow between £500 and £50,000.
- Expensive interest rates apply.
- Missed repayments may lead to penalties, but you are not likely to lose your car.
Read the full guide below, or skip to the best rates.
It can be difficult to get a loan if you have a damaged credit rating, lack a guarantor, or lack significant assets to secure a loan against a house or other valuable possession. For many people, the most valuable thing they own is their car, and they need it to get to and from work, run errands to keep the family running smoothly, and that kind of thing. If this sounds like you, a practical solution might be a logbook loan.
What is a Logbook Loan?
A logbook loan is basically using the value of your car to allow you to borrow money. Logbook loans require the borrower to sign over temporary ownership of a vehicle to the lender, offering it up as security against the loan. In other words, as long as you owe money to the lender, the lender effectively owns your car.
Do I need to own my car?
Yes. If you have your car as part of a let or lease scheme, you do not actually own it, and so it cannot be used to secure a loan. Likewise, if you have financed your car and owe a substantial amount to the original lender, you are not likely to be able to use it as security.
What happens if I need to use my car for work?
You would still remain in possession of the vehicle, and be able to drive and use it as normal. As long as you make your payments on time, there will be no disruption to your use of it. Once the loan is repaid in full, the vehicle is signed back over to you.
How much can I borrow on a logbook loan?
It is likely that you will only be able to get a loan for about half the value of the vehicle, and loans range from as low as £500 up to £50,000.
How do I get the money from a logbook loan?
Most lenders use direct deposit to transfer your money to you, and this usually happens the same day as your loan is approved. Some lenders do offer a cash service, but this comes with an additional fee, often around 4% of the total amount loaned.
Once you have your money, there are no restrictions on how you use it.
The Money Advice service has an interesting article on this here.
Logbook Loans FAQs
How expensive is a Logbook Loan?
Annual interest (APR) on logbook loans can be around 400%, making them much more expensive than some other loans, but cheaper than payday loans and some credit cards. As with any expensive loan, it is better as a short-term solution, and paid off as quickly as possible.
Alternatives to a Logbook Loan
How does the age or car model change the logbook loan?
Most logbook loans are made against cars that are fewer than ten years old, but this is only because most cars older than that do not retain enough value to secure a loan. If a car is rare, a collectible or classic, or has some other monetary value attached to it, it may be suitable as security despite being older than ten years. It is the resale value of your car that determines the amount you can borrow, so the more money your car is worth, the more a lender will be willing to lend you.
Will I lose my car if I miss a loan payment?
In theory, if you miss a payment, the lender can sell your car to recoup the money owed to them. In reality, reputable lenders are more interested in helping you repay the loan than in taking your vehicle. If you miss a payment, or know you will have trouble making your next payment, contact the lender and be open with them. You may have to pay a small fee or penalty, but in most cases they will work with you to help you service your loan, and keep your vehicle. Similar to the payday loans industry, the logbook loans industry has been reported to be acting in a predatory fashion on many news publications.
By law, if they decide to take possession of the vehicle, they need to give you 14 days’ notice to fix the problem. If you do not, or cannot, catch up on what is owed or come to an agreement with the lender, then they can hire bailiffs to take your car from you.
Some borrowers may give up on paying the loan and let the lender take the car, but that does not necessarily mean the end of the agreement. The lender will sell the vehicle, but if there is any money left over after the vehicle has been sold, you will still be liable for that. The lender can take you to court to recoup any outstanding money.
It is important to consider this when you take out a logbook loan, and do so only with the intention and means to repay it. You can read more about the Financial Ombudsman issues here: http://www.financial-ombudsman.org.uk/publications/ombudsman-news/119/119-short-term-credit.html
Where are the best places to get a logbook loan in the UK?
These loans are available in England, Wales and Northern Ireland, but not in Scotland, due to different regulations. If you live in Scotland, the contract will be for either a hire-purchase or conditional sale, and will have different terms and conditions.
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