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i England, Wales and Northern Ireland

Logbook loan debt. Can they take my car?

Logbook loans are a way to borrow money using your vehicle as security. The loan company takes ownership of the vehicle until you pay them back.

You can keep using the vehicle, but it can be sold if you do not pay.

Logbook loans are normally paid back over one to three years.

The amount you borrow depends on the value of your vehicle. It is usually £400 to £5,000.

The interest rate on logbook loans is high:


  • The interest is often 300% APR or more
  • You often pay back more than double what you borrow

These loans are very expensive way to borrow. Get free and impartial debt advice before you take one out.

How does a logbook loan work?

England, Wales and Northern Ireland

Two separate agreements are signed when a logbook loan is issued:

1. A personal loan agreement

This sets out:


  • How much you are borrowing
  • How you will repay it

It is regulated by the Consumer Credit Act.

2. A ‘bill of sale’ agreement

This transfers the legal ownership of your vehicle to the creditor.

This lasts until the last loan payment is made.

Most companies also ask you to hand over:


  • Your V5 logbook
  • Your other vehicle documents

The vehicle belongs to them even if you do not give them these documents.

You cannot legally sell it in this time.

Scotland

Logbook loans are not common in Scotland.


  • Bills of sale are not valid under Scottish law
  • Logbook loan companies do not have the same legal powers in Scotland

Logbook loan arrears

The company you owe will contact you if you miss payments.

You will get a default notice if you still do not pay.

This gives you 14 days to bring the account up to date before:


  • The account defaults
  • Further action can be taken, including vehicle repossession

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Logbook loan repossession

The creditor can repossess your car if your account defaults.


  • They must wait at least five days after the account defaults
  • They do not need to take you to court

They usually tow away the vehicle. They can do this any time.

Extra charges will usually be added to your debt to cover the costs of removal.

The logbook loan company auctions your vehicle after they take it.

The sale price at auction may not cover the whole debt.


  • In this case, you have to pay the ‘shortfall’
  • You can pay it in instalments

The sale price may also be more than the total you owe. The difference must be paid back to you in this case.

Can I get a logbook loan with bad credit?

Some lenders may give you a logbook loan if you have bad credit. But that is up to them.

Is there a logbook loan on my car?

Logbook loans are usually recorded on a database called the HPI Index.


  • Anyone can check this before they buy a vehicle
  • Car dealerships should also check this index

It is illegal to sell a vehicle before the logbook loan is paid off.

Selling the vehicle early could lead to:


  • The loan company taking legal action against you
  • The loan company repossessing the vehicle

You can take court action against someone who sells you a vehicle with an unpaid logbook loan.

Logbook loan debt help

Use our online debt advice if you are struggling with logbook loan debt.