If you have heard the term logbook loan but never been quite sure what it means, you are not alone. The product has an old-fashioned name and works a little differently from most borrowing, which can make it hard to compare.
This V5 Solutions guide starts with a short definition and the key terms, then walks through how the loan works, who it is designed for, and what to weigh up before choosing it.
A Short Definition
A logbook loan is a secured loan where the security is a vehicle you own. The lender takes legal ownership of the vehicle for the length of the agreement, you keep using it, and ownership comes back to you once everything is repaid. Because the loan is secured, the vehicle can be repossessed if repayments are not made.
Key Terms in Plain English
- Logbook (V5C): the registration certificate issued by the DVLA, showing the registered keeper of a vehicle. It gives the loan its name, but V5 Solutions does not take it from you.
- Secured loan: borrowing backed by an asset. If the borrower defaults, the lender can recover the money by taking that asset.
- Bill of Sale: the legal document that transfers ownership of the vehicle to the lender as security while you keep possession of it.
- Hire Purchase: the type of agreement used for these loans in Scotland, because Scots law does not recognise bills of sale, and for some other loans elsewhere in the UK. With V5 Solutions it is signed online.
- APR: the annual percentage rate. It combines interest and compulsory charges into one yearly rate, helping you compare loans with different terms.
- Early settlement: paying off the loan before the end of the term. With V5 Solutions you can do this at any time and receive a rebate on interest.
How the Loan Works, Stage by Stage
- Quote. You provide details about yourself and your vehicle. A soft search produces a personalised quote without affecting your credit score.
- Assessment. We consider the vehicle's value and whether the loan is affordable. An underwriter reviews your bank statements and calls you.
- Signing. You e-sign the credit agreement. For most loans a signing agent visits to witness the Bill of Sale.
- Payout. The money is sent by bank transfer, usually within 24 working hours of applying.
- Repayment. Weekly or monthly payments are taken by recurring debit card payment over 18 to 60 months, with interest fixed from the day you sign.
- Completion. When the final payment is made, ownership returns to you.
V5 Solutions lends from £1,000 to £50,000 against cars, vans and motorbikes. Each stage is covered in more detail on our page about how logbook loans work.
Who Logbook Loans Are Designed For
These loans are mainly used by people who own a vehicle outright and need to borrow, but who find mainstream credit hard to obtain, often because of past credit problems. As the decision rests on vehicle value and affordability rather than credit score alone, a logbook loan can be available when a bank loan is not.
They are less suitable if you already struggle to keep up with bills, if your income is uncertain, or if you could not cope without the vehicle should something go wrong. They are also not designed for very small sums.
Costs, Risks and Alternatives
Borrowing secured on a vehicle is generally more expensive than a personal loan from a bank or credit union. Before applying, check the representative example on our calculator and compare the total amount repayable with other options. Alternatives to consider include:
- a loan from a credit union
- a payment arrangement with whoever you owe
- a Budgeting Advance, if you receive Universal Credit
- borrowing from family, with clear terms agreed in advance
This article is general information, not financial advice. If you are dealing with debt, free and confidential help is available from National Debtline and Citizens Advice. You can also find out more about our logbook loans or browse the FAQ.
Your car may be repossessed if you do not keep up repayments on a loan secured against it.
