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Are Logbook Loans Safe & Is It Right For You?

Money Savings Advice Are logbook loans safe

There are risks to any secured loan. Logbook loans are no exception. They’re safe if you keep up with your payments, though you risk losing your car if you don’t.

Are Logbook Loans Safe?

If you can keep up repayments then a logbook loan is safe. You should ensure you’ll have no issues affording the loan, or you might risk losing your car. A logbook loan is a bad idea if your car is essential.

Logbook loans, also known as V5 loans, are loans against the value of your car. You’ll borrow from a lender who’ll give you money in exchange for temporary vehicle ownership. For the duration of the loan, your vehicle is owned by somebody else.

If you can’t keep up with repayments and meet your financial obligations, the lender can take permanent ownership of your vehicle.

Read on to learn more about logbook loans and whether or not they’re safe.

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Why Are Logbook Loans Safe

When you take out a logbook loan, you’re securing the debt against your car. You’re more likely to have your loan application approved. Lenders will temporarily own your vehicle, just until you’ve cleared your debt. As long as you keep up with your loan repayments, there should be no long-term issues. Most lenders are happy to let you keep using your car.

If you can’t keep up with your payments, logbook loans can be problematic. The lender will own your vehicle and is likely to come and collect it. In most cases your debt will be cleared in exchange for the vehicle you’ve lost.

If you’re applying for a logbook loan, you must be willing to lose your car. Even if you think that you’ll stay in control, things can sometimes go wrong.

It’s tempting to secure a loan against your car and convince yourself that you won’t lose it, but you don’t want to be left with regret if something goes wrong during the loan term.

Don’t secure a loan against your car if your vehicle’s an everyday essential. If you need the car to get to work, or take the kids to school, securing a loan against it could leave you in a bad situation. Before you apply for a logbook loan, be sure that your car is something you can afford to lose.


On average every consumer in the UK has a £9,000 loan, £7,000 on credit cards, £1,400 overdraft.

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Can All Logbook Loan Providers Be Trusted?

It’s very important to apply for a loan from a reputable lender. Search the Financial Services Register, checking carefully to make sure that a lender is genuine.

If you don’t use a reputable registered lender, you risk an unsafe borrowing experience. Be sure that you’re confident giving your V5C document to your chosen lender.

How Affordable Are Logbook Loans?

Lenders make sure that they’ll get their money back by securing the loan against your car. If you can’t repay your debt, they’ll take your car and sell it. In most cases, this provides security for lender and borrower. Your lender knows that they won’t lose out and you know that your debt can be cleared, even if you struggle to keep up with your repayments.

In some cases, having a loan secured against your car can cause problems. The amount a lender is happy to give you will depend on the value of your car. You can borrow more money against a high-value vehicle than an old, worn out car. Yet, the car we drive isn’t always a reflection of current financial circumstances.

If you’re on low income but own a high value car, some lenders will offer larger loans secured against the value of your vehicle. They should make sure that any loan is affordable, but may be more focused on how they’ll get their money back if it isn’t.

Before you take out a logbook loan, check that it’s truly affordable. Can you afford to make the repayments that will stop you from losing your vehicle?

Logbook Loans and Damaged Vehicles

When you’re applying for a logbook loan, the lender will consider the current value of your car. The amount you can borrow depends on your car and the condition that it’s in.

Lenders want to know that if you can’t repay your debt, they’ll get their money back by selling your car. But what happens if your car value goes down whilst you’re repaying your loan?

A car accident can cause your vehicle to be an instant write-off. Even smaller scratches and scrapes can lower the value of your car.

If you damage your car, you will still be liable for the loan. You should inform your insurer, who will make sure that any payment they make first clears the debt that you owe. If you’re not getting money for the damage to your car, you’ll need to find this money yourself. It’ll be particularly important that you keep up with loan repayments.

Logbook loans continue to exist even if the security doesn’t. It becomes harder for lenders to get their money back, but they’re still within their rights to make that happen. You’ll be chased for any outstanding debt just as you would be with any other loan.

The lender may still take your car, if it can be scrapped or sold to partially clear outstanding debt.



Logbook Loans and Other Restrictions

When a logbook loan is secured against your vehicle, you’re subject to other restrictions. Understandably, with an outstanding loan, the car isn’t yours to sell on.

You can’t sell your vehicle whilst it’s being used as security for any outstanding loans. You’ll need to clear your logbook loans before you sell your car. If you don’t clear your debts, the lender may repossess the car from the buyer. Of course, the buyer can then take legal action against you.

For the duration of the logbook loan, you’re unable to sell your car and should be very careful not to damage it. Your vehicle is your loan security, and without it you may find yourself with a lot of ongoing debt.

Staying Safe With a Logbook Loan

Assuming that you can afford your loan repayments, make them all on time and keep your car in the same condition, borrowing money from a reputable lender should not cause any problems. Unfortunately, with logbook loans, there are many chances for things to go wrong.

Accidentally reversing into a bollard at the supermarket is no longer just an upsetting mistake. Now, it’s lowered the value of the car that you’re using as logbook loan security.

Losing your job or reducing your income now comes with additional problems, including the potential loss of your car if you can’t maintain your debt repayment.

Selling your car isn’t an option until your debt is clear, so you may be stuck with a car you don’t want or that doesn’t meet your current needs.

With so many ways for a logbook loan to cause additional problems for borrowers, it is very important that you understand the risks before you consider logbook loans.

The Main Issues With Logbook Loans

The Financial Ombudsman has listed the top complaints they receive with regards logbook loans. These include:

  • Customers feeling they weren’t given the right information about how the loan works when they applied
  • Lenders not checking affordability thoroughly
  • Lenders adding unfair fees and charges to loan agreements that made it unaffordable
  • Lenders not offering help to customers who are having problems paying back the loan
  • Cars being taken away by lenders without warning, often resulting in personal possessions inside the car being lost.

If you feel like you’ve been mis-sold a logbook loan, you should speak to the lender first. If they don’t resolve it to your satisfaction you can complain to the Ombudsman.

And if you’re just considering a logbook loan, make sure you consider the above complaints and that you question the lender to ensure you receive fair treatment.

Using our guides, you can find out more about logbook loans and any suitable alternatives. You can also speak to one of our trusted financial partners, learning more about your borrowing options and how you can look after your bank account.

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How Can Money Savings Advice Help You With Getting a Loan?

Here at Money Savings Advice, we have partnered with some of the UK’s leading loan broker companies. They have already helped thousands of people get the best loan that suits their needs, and they can do the same for you.

Choosing an independent loan broker means they won’t proceed with an application unless they are sure it is in your best interests. They are also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these loan brokers who can help you get a loan, then click on the below and answer the very simple questions.

Len Burgess

Len Burgess is a professional financial writer who over the last five years has written hundreds of articles for all financial sectors. Len founded Money Savings Advice with the aim of helping consumers navigate their way around the financial world by providing easy to understand financial information and matching consumers with the best financial advisor based on their personal information.

Len Burgess

Len Burgess is a professional financial writer who over the last five years has written hundreds of articles for all financial sectors. Len founded Money Savings Advice with the aim of helping consumers navigate their way around the financial world by providing easy to understand financial information and matching consumers with the best financial advisor based on their personal information.

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