With the dark cloud of low credit scores hanging over the heads of most UK citizens, logbook loans have become the credit facility of choice to many. You don’t need to look far to understand why this is the case. Simplicity of the application process, few requirements and the fact that credit checks are not a determinant are some of the reasons as to why Logbook loans have gained favour with most UK citizens reeling from a poor credit rating.

But before we move forward, what are logbook loans?

Well, if you are thinking of taking out a logbook loan for the very first time, it is quintessential to note that they are generally classified as bad credit loans. In other words, individuals with bad credit are most suited to apply for this kind of loan. That said, from the mention of the name, logbook loans are generally a way through which bad credit individuals get access to loans using their cars as collateral. A person simply signs over ownership of their car to the lender in exchange for a certain amount of money.


What happens is that you simply lose or rather hand over ownership of your car for the duration of the loan but continue using it on a daily basis or even to generate income while you repay the loan. The repayment period of a logbook loan spans over 36 months and the amount of money you can request for under a logbook loan is informed by the value of your car, your salary as well as your ability to repay the loan comfortably. That said, logbook loans are somehow a little expensive compared to standard loans. They attract an APR of 400% or more which means that you are bound to repay more than twice the principal amount (You therefore need to apply for logbook loans as a measure of last resort).

What happens if you miss a payment?

Well, while defaulting is not always a pretty thing, it happens every once in a while due to circumstances beyond the borrower. When you miss a payment, the logbook loan lender will first contact you with the aim of reminding you to repay the loan. Of course, if you are facing financial challenges, this is the time you need to approach your creditor and work something out. Most lenders are usually open to redrafting the initial agreement to reflect your current financial position. However, in situations where you are unable to repay, your creditor is bound to repossess your car as a measure of last resort.

Is it recommended to sell off a logbook loan car?

Of course not! It is imperative to note that once you sign off your car in exchange for a logbook loan, you cease to be the rightful owner for the duration of the loan. Legally, the car belongs to the creditor until such a time you clear your debt. As such, since you are not the legal owner of the vehicle, you will essentially be breaking the law should you sell off your logbook loan car. The lender has the right to repossess it from the buyer and the buyer also has the right to sue you and get their money back. It is perhaps for this reason why UK citizens are encouraged to check the HPI index prior to buying a car. The HPI index is a database that keeps records of all cars with a logbook loan attachment.

In a nutshell, logbook loans are a great way through which you can get access to cash fast even if you have bad credit. That aside, it is also a very expensive way of getting credit and therefore one should only resort to logbook loans as a measure of last resort!