What is a logbook loan? How they work and the risks
Written by
Joe Towner
Reviewed by
Amy LancashireA logbook loan is a way of borrowing money secured against your vehicle, often a car, but also sometimes a van or motorbike. You hand over your V5C registration document (also known as the "logbook") and sign an agreement that transfers legal ownership of the vehicle to the lender until you've repaid. You keep driving it in the meantime.
They're one of the most expensive and highest-risk ways to borrow. Interest rates are typically around 400% APR, and because the lender owns your vehicle under the agreement, they can repossess it if you fall behind, in some cases without going to court. This guide explains how they work, what they cost, what happens if you can't repay, and the cheaper alternatives worth considering first.
What kind of loan is a logbook loan?
A logbook loan is a form of secured borrowing, which means the money is secured against something you own, in this case your vehicle. If you're new to borrowing, our guide on how loans work covers the basics, and what a secured loan is explains the wider category.
The "logbook" refers to your V5C registration certificate, which shows who the registered keeper of the vehicle is. In England, Wales and Northern Ireland, the loan is set up using a legal document called a bill of sale, governed by the Bills of Sale Act 1878 and its 1882 amendment. Signing it temporarily transfers legal ownership of your vehicle to the lender as security. When you repay the loan in full, ownership passes back to you.
Logbook loans are often aimed at people with poor credit histories, because lenders tend to focus on the value of your vehicle rather than your credit score.
How do logbook loans work?
The process is usually quick and done online or in person:
You apply with your vehicle details, proof of income and your V5C
You sign a credit agreement and a bill of sale, which transfers ownership of the vehicle to the lender
You keep and drive the vehicle as long as you keep up repayments
You repay in instalments, weekly or monthly, over a term that's commonly 12 to 36 months
Once the loan is fully repaid, the bill of sale ends and ownership returns to you
How much you can borrow is based on your vehicle's value, usually a proportion of its trade value rather than the full amount. To qualify, you'll typically need to be the registered keeper, own the vehicle outright (or have very little finance left on it), and have a vehicle that's taxed, insured and road-legal.
How much do logbook loans cost?
Logbook loans are expensive. Typical APRs are around 400% or higher, far more than a standard personal loan. For context, the average rate on a new personal loan in the UK was 9.09% in March 2026, according to the Bank of England.
Unlike payday lending, logbook loans are not covered by the FCA's cap on the cost of high-cost short-term credit, so there's no limit on the total you can be charged.
What happens if you can't keep up repayments?
This is where logbook loans carry the most risk. Because the lender legally owns your vehicle under the bill of sale, they can repossess it if you default.
If you miss payments, the lender must first send a default notice giving you 14 days to pay the arrears, as National Debtline explains
If the bill of sale is registered with the High Court, the lender does not need a court order to take your vehicle. If it isn't registered, they must get a court's permission first
Logbook loans do not give you the "protected goods" safeguard that applies to hire purchase and conditional sale agreements. Under section 90 of the Consumer Credit Act 1974, once you've paid a third of a hire purchase agreement the lender needs a court order to repossess. That protection does not apply to a bill of sale, so a logbook lender can repossess even if you've paid off most of the loan
If your vehicle is sold and the sale doesn't cover what you owe, you remain liable for the shortfall. If it sells for more than you owe, the difference should be returned to you
If you're struggling with repayments, it's worth getting free debt advice early. Our guide on how to get out of debt explains where to start.
Are logbook loans different in Scotland?
Yes. Bills of sale aren't legally enforceable in Scotland, so traditional logbook loans aren't available there. Lenders advertising "logbook loans" in Scotland may be using a different arrangement, such as hire purchase or conditional sale. These are regulated under the Consumer Credit Act, which means they come with stronger protections, including the "paid a third" rule described above.
Thinking of buying a used car? Check for a logbook loan first
If you buy a used car privately and it turns out to have an unpaid logbook loan attached, the lender can repossess the vehicle from you, even though the debt isn't yours. This has caught out many buyers, a problem Citizens Advice has raised in the past.
Before buying a used vehicle, run a vehicle history check (sometimes called an HPI check), which can flag an outstanding bill of sale or finance. Buying from a reputable dealer and keeping proof of the sale also helps protect you.
Cheaper and safer alternatives
Because logbook loans are an expensive form of credit and put your vehicle at risk, it's worth looking at other options first:
A credit union loan – community lenders with a legal cap on the interest they can charge. Here's how credit union loans work
An unsecured personal loan – even with a poor credit history some lenders may offer one, and unlike a logbook loan it doesn't put your vehicle at risk. See what an unsecured loan is
An arranged overdraft – if your bank offers one, it may cover a short-term gap for less
Talking to the people you owe – utility companies and other creditors may agree a payment plan if you contact them early
Free debt advice – if money is tight, a free service can help you find a way forward
A payday loan is another form of high-cost borrowing, though it's capped by the regulator in a way logbook loans aren't. Our guide on what a payday loan is explains how that works.
FAQs
There are a range of financial products available that may suit your needs. We encourage you to research your options carefully and consider seeking independent financial advice before making any decisions. This blog is for informational purposes only and does not constitute financial advice.
