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Logbook Loans

Logbook loans enable you to borrow money by using your vehicle as security. Just like loans secured against your home, if you fall behind on repayments your vehicle may be taken from you by the creditor and sold at auction.

You can continue to use your vehicle during the loan period, which will usually last between one to three years. The value of your vehicle will dictate how much you can borrow, but logbook loans can be anything from £400 to £5,000. Expect a high interest rate with logbook loans. Often hitting 300%, you are likely to pay back double what you borrowed originally.

If you have taken out such a loan and have built up arrears, we have some invaluable advice.

What happens if I miss my logbook loan repayments?

Your creditor will contact you if you fall into arrears. You can expect to receive a default notice giving you fourteen days to bring the account up to date. If you don’t respond within that time, the creditor has the right to take your vehicle off your hands and sell it.

How will they seize my car?

If your logbook loan defaults, the creditor must wait a minimum of five days before they can repossess your vehicle. They do not have to contact the court to do so. If this happens, your vehicle will usually be towed away and there are no limits to when the creditor can carry out the task – it could happen late at night or early in the morning, leaving the prospect of waking up and finding yourself without a vehicle a very real possibility.

Repossessed vehicles are usually auctioned. If the sale price doesn’t cover the debt you owe, you’ll be asked to make up the shortfall.

Is the vehicle still mine while I’m paying back a logbook loan?

No. During the loan period, the creditor effectively takes ownership of your vehicle. Therefore, if you attempt to sell it during that period, they are within their rights to take court action against you.

Ignoring this fact is highly inadvisable. If you do sell your vehicle, the creditor can also seize it from the new owner and doesn’t require permission from the court to do so. If that happens, the new owner will possibly take court action against you in order to recover their loss.

Final thought on logbook loan debt

Securing loans against anything you own is not to be taken lightly. Whether it be your home or, in this case, your car, motorcycle or van, the consequence of falling into arrears will have a very significant impact on your livelihood and day-to-day activities.

Due to their incredibly high interest rates and inherent risk, we would not recommend taking out a logbook loan – it is far better to investigate other avenues of borrowing.

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