The pros and cons of log book loans

A logbook loan is a loan secured on your vehicle. The lender becomes the temporary owner of your vehicle until you pay back the loan. If you fail to make your payments you risk losing your car.

How does a log book loan work?

Most log book loans allow you to borrow between £500 and £50,000, depending on the value of your car. However, many log book loan companies will only allow you to borrow up to 50% of the value of your vehicle.

When you take out this type of loan you have to hand over your vehicle registration document and sign both a credit agreement and a bill of sale. This means the loan company becomes the temporary owner of your car but you can continue to drive it as long as you keep up your loan repayments.

How much does a log book loan cost?

There are no credit checks carried out for log book loans so they are often used by people with a poor credit history. Since this type of loan is considered to be high-risk for the lender, it is very expensive. The typical annual percentage rate (APR) for a log book loan could be in excess of 400% APR, compared to 99.9% APR (representative) which is the typical rate of interest available from 118 118 Money.

Log book loan example:*

If you borrowed £1,500 at 437.4% APR (typical) and paid £53.60 a week for 78 weeks, the total cost of your log book loan would be £4,180.80.

* The Money Advisory Service

Provided there is no penalty charge, you could pay considerably less if you repay your loan early. Always check the details of any loan to make sure you’re aware of all possible charges and hidden costs before accepting the terms and conditions.

What happens if I fail to make my repayments?

If you fail to make your log book loan repayments, your lender will seize your car and sell it to recoup the money you owe them. If the vehicle is sold for less than the amount you owe, you would still have to pay back the difference and the loan company could take you to court to get the shortfall back.

Even if the log book loan company was willing to overlook several missed payments before they seized your car, the total cost of your loan could begin to spiral out of control very quickly because of the extremely high interest rates you are paying.

Can anyone apply for a log book loan?

To apply for a log book loan you have to be over 18 and the legal owner of a vehicle that is worth more than £500. If you have not finished paying for your vehicle you may not qualify for one of these loans, although some lenders may still give you a loan if there is a small amount of finance outstanding. You will also need proof that the car has a valid MOT and is currently insured and taxed.

How can I be sure the lender values my car accurately?

A reliable log book loan lender should ask you to take your car to a local agent of your choice so the true market value of the car can be confirmed.

What can I use a log book loan for?

Lenders rarely place any restrictions on what you can use your log book loan for. So whether you need to do emergency home repairs, you intend to pay off debts or you want to book a family holiday, it’s unlikely to affect your loan application.

How quickly can I get a log book loan?

Loan decisions can be made very quickly because there are no credit checks. However, the loan will usually be paid by cheque so you have to wait several days for the cheque to clear before you can get your hands on the cash. If you’re willing to pay a fee of around 4%, some companies offer a quick cash service.

Disadvantages of log book loans Advantages of log book loans
✘Very expensive way of borrowing with a typical APR in excess of 400% ✔ No credit check
✘ Your debt can quickly get out of control if you fall behind with repayments ✔ Borrow between £500 and £50,000, depending on the value of your vehicle
✘ The loan amount is sometimes paid by cheque so it could be days before you get your hands on the cash ✔ No restrictions on how you spend the money
✘You risk losing your vehicle if you fail to keep up your repayments

Try 118 118 Money

Here at 118 118 Money we aim to provide you with the money you need. We understand that emergency situations come up so we take time to understand your financial situation and how much you can comfortably repay each month.

All of our applications can be completed online, meaning you get an answer faster and without having to head to the bank for an interview.
Why not speak to our team today or use our online calculator to see how much you could borrow, what the APR would be, what your monthly repayments could be and over how many months. Once you’ve decided, you can complete the form via your desktop, mobile, or tablet and receive the loan you need.

There’s no need to pay back more than you have to; with us you could actually pay back less than you would in comparison to other instalment loan lenders.

Apply today and see how 118 118 Money can help.

Representative example: Amount of credit £1,810.48 for 24 months. Interest rate: 71.3% pa (fixed). 24 scheduled monthly payments of £143.48. Total amount repayable: £3443.52. Representative 99.9% APR.

Rates from 35.9% APR - 99.9% APR fixed.