What is a logbook loan?

Key takeaways

• The lender temporarily owns your car until the loan is repaid

• With logbook loans (sometimes called V5 loans), you can generally loan between £500 and £50,000

• Many logbook lenders don’t perform credit checks, so bad credit scores don't rule you out for being accepted

• You can still drive your car while repaying the logbook loan

What is a logbook loan?  

Logbook loans, sometimes known as V5 loans, are short-term loans that are secured against your car. This means the lender will temporarily own your car until the loan is paid back and can take away the vehicle and sell it if you fail to make repayments.   

You’ll still be able to use your car as long as you repay the loan. Logbook loans in the UK are available in England, Wales and Northern Ireland but not Scotland.

It's important to remember that logbooks can be an expensive way of borrowing and are best avoided in most circumstances. Here at MoneySuperMarket, we do not offer logbook loans. 

How do logbook loans work?  

When you take out a logbook loan, the process works like this:

Am I eligible for a logbook loan?  

Eligibility requirements for a logbook loan will vary across lenders. But this is what is generally required: 

• You must be over 18 years of age 

• You must have a UK bank account 

• Your car must be clear of finance (or the outstanding finance must be low) 

• Your car can’t have a loan secured against it 

• Your car must be road-legal including being taxed, insured and MOT’ed 

• You must provide proof of regular income to cover repayments 

• You must be the legal owner of the car 

• The V5 logbook must be in your name 

How much can I borrow with a logbook loan? 

How much you’ll be able to borrow with a logbook loan will vary across lenders. However, in general logbook loan providers are prepared to lend between £500 and £50,000.

The amount you’ll be able to borrow will depend on how much your car is worth. Some lenders may lend you half of your car’s value.  

Are logbook loans expensive? 

Logbook loans are more expensive than other loans because of their sky-high APRs. According to the Financial Conduct Authority (FCA), the average the average APR of a logbook loan is around 400%.

To put that in perspective, most secured loans have APRs below 10% and even the most expensive secured loans generally come in up to 13% APR. 

Meanwhile, the cheapest rate on an unsecured personal loan available from MoneySuperMarket is 6.1% [as of November 2024).

What fees apply to logbook loans?

You may incur fees with a logbook loan if you want your money in cash instead of a bank transfer. Some lenders may charge fees of up to 4% of the loan.

What are the pros and cons of logbook loans? 

Advantages: 

• Can pay off your loan early: For other types of loans, you’ll likely face an early repayment fee if you pay the loan off early. However with logbook loans, you will usually not have to pay a penalty for settling your loan early. (This might not always be the case, so check with your lender) 

• You can borrow money quickly: One of the major benefits of a logbook loan is that you can get access to the funds faster than with other types of borrowing. Depending on the lender, you could even get the funds in an hour

• You could get access to more money: The logbook loan amount will depend on your vehicle. If you have a very expensive car, you could borrow more money. A logbook loan may let you borrow more than you could with a standard loan because the lender bases the amount on your car’s value

• Weekly repayments: Most logbook loans are paid back in weekly repayments, this might suit you better than paying back your loan every month

Disadvantages:  

• Expensive: APR rates on a logbook loan can be as high as 400%, making them an extremely expensive way to borrow

• You could lose your car: If you can’t keep up with payments, you face the possibility of losing your car, as your loan is secured against your vehicle

• No direct debits: Some lenders may not allow you to set up a direct debit, this puts the responsibility on you to keep up with loan repayments. This can be very inconvenient when the payments are weekly

• Less financial protection: Logbook loans have less protection for you as a borrower than other loan types

Can I still use my vehicle while I have a logbook loan?  

You’ll still be able to drive your car while paying back your logbook loan. You will only have to stop using it if you don’t keep up with the loan repayments, in which circumstances the lender will take ownership of your car. 

Can I get a logbook loan with a bad credit score? 

Because many logbook lenders don’t carry out credit checks, you could get a logbook loan with a bad credit score.

For the reason that the logbook loan is secured against your car, lenders know they can repossess your car if you can’t keep up with loan repayments.

This could be why they’re more willing to lend to borrowers with lower credit scores who might be rejected by high street lenders. 

Although it might seem like a good thing that you could get a logbook loan with bad credit, this carries a lot of risk. If you can’t keep up with payments, you risk your credit score plummeting further and losing your car. 

What happens if I can’t make my repayments on a logbook loan?  

If you can no longer keep up with the repayments on your logbook loan then you face the prospect of losing your car. 

The lender can sell your car to pay off the outstanding debt. If the value of your vehicle isn’t enough to pay off the entire loan, you may still be liable for the remaining balance. 

If the lender repossess your car, they will have to send you a default notice first and you’ll have 14 days to respond.  

What are the alternatives to logbook loans?  

Due to how expensive and risky logbook loans can be, they are usually best avoided. Here are other options for borrowing money: 

Other useful guides 

• What is a loan?

• Guarantor loans explained

• Unsecured loans vs secured loans

Compare loans for with MoneySuperMarket

Finding the right loan is straightforward with MoneySuperMarket. Our eligibility checker tool can show you the likelihood of acceptance without impacting your credit score.

MoneySuperMarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this broking service. Instead, we are usually paid a fee by the lenders – though the size of that payment doesn’t affect how we show products to customers.