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Log Book Loans

Page last updated Friday, 12 April 2013


Latest news re Log Book Loans


OFT imposes requirements on Hermes following their acquisition of Log Book Loans

Details of what the OFT found wrong following a detailed investigation and on-site visit.  Read more


Are some Log Book Loans now unenforceable following the latest OFT requirements placed on Hermes / Log Book Loans?

Marcus Bright, a Civil Litigation Consultant with Maxim Legal and Commercial gives his view of the implications for customers of Hermes.  Read more


Can you help with a 'Group Action' on Log Book Loans?

Have you purchased a vehicle in good faith and later discovered that it was the subject of a bill of sale (or logbook loan) taken out by a previous owner? Perhaps the vehicle was seized from you by the logbook loan company or a demand for money has been made on you.

If this is you then read more here Group Action re Log Book Loans.


BBC Inside Out London

You can watch debt finance specialist Mike Thomas as he investigates the rise in logbook loans and exposes how unscrupulous car sellers are shifting their debts to unsuspecting buyers.  Watch here - BBC Inside Out - London


Log Book Loan Self-Help Guide

On the 27th February 2012 and in connection with Mike Thomas appearing on 'BBC Inside Out London' and then followed by 'My Worst Deal' we launched our bespoke Log Book Loan Self-help Guide.

The guide is designed to help you with arrears, repossession and excess charges. It also informs you of your consumer rights plus lots more.

Take me to the Log Book Loan Self-help Guide.


Log Book Loans

A 'Log Book' Loan is a loan secured against your vehicle, (a car or a motorbike). Having a log book loan means that you will lose your vehicle if you default on the repayments to the loan company.

How much can I borrow?

Loans range from £500 to £50,000 according to the value of the vehicle in question.

Will I have to undergo a credit check?

No, this type of loan is usually taken up by those whose record denies them access to the more usual forms of credit. Basically they are available to anyone irrespective of their credit history.

How do I qualify?

  • Be aged 18 or over
  • Be the legal owner of the vehicle
  • Hold a current tax disc, certificate of insurance and a valid MOT for the vehicle
  • Have no or very little finance outstanding on the vehicle
  • Demonstrate you can repay the loan

Who keeps the Log Book?

The lender keeps it for security in case you do not pay.

How do I make payments back on a Logbook Loan?

Generally the standard term for a Log Book loan is 58 weeks, although it may be possible to pay it off earlier. Because the APR can be high it is advisable to pay it off as quickly as possible.

What is Representative APR?

From the 1st February 2011 any business that offers loans or products on credit has to change the way they show their APR. It is no longer described as a 'Typical APR' but as a 'Representative APR'.

This means that 2 things have changed;

  • Previously the lender had to detail the typical APR of a loan that applied customers that would have replied to that advert, this has now been reduced to 51% of customers
  • Lenders now have to include a the rate of interest in their Representative APR example.

What does APR stand for?

APR stands for Annual Percentage Rate; it includes such things as

  • the interest rate you must pay;
  • how you repay the loan; i.e. the length of the loan agreement (or term); frequency and timing of instalment payments and amount of each payment;
  • certain fees associated with the loan;

Lenders must tell you what their Representative APR is before you sign an agreement and it will vary from lender to lender.

For example; you borrow £1,500 and pay £53.60 a week for 78 weeks. You repay a total of £4,180.80 with a typical APR of 437.4%, (yes, four hundred & thirty seven percent interest rate).

What are the advantages of a Logbook Loan?

  • No credit check
  • Available to those with an impaired credit history
  • Funds can be available immediately according to which firm you use
  • No restriction on what the money can be used for

What are the disadvantages of Logbook Loans?

  • A very high APR, possibly as much as 437.4%, making it a very expensive form of borrowing
  • The debt quickly escalates out of control if you start to fall behind with the payments
  • You could lose your car if you fail to keep up the payments on the loan

Do I have to sign anything or just hand over the log book?

You will have to sign Bill of Sale along with a credit agreement. By signing the bill of sale you temporarily hand over ownership of the vehicle to the loan company giving them the right to repossess the vehicle in the event of you defaulting on the payments.

How do I get paid?

Usually by cheque which will take several days to clear, some firms offer a quick cash service but can charge as much as 4% in fees for this option.

How do know I how much I can borrow against the vehicle?

The firm will usually ask you to take vehicle to an agent in a location of your choice together with some documentation.

When you meet with the Loan Officer/Agent, they will carry out a quick inspection of the vehicle and confirm the vehicle valuation provided over the telephone. Following this an offer will be made.

If you take up a Log Book loan it is important to remember that whilst you keep your car, the lender will keep your log book until you have repaid the loan.

How to deal with debt

If you are struggling to meet your payments then try our free budget form

This form will help you work out how much you need each month to meet your essential bills before you pay your unsecured debts, such as your store cards, credit cards and personal loans.

It's free and has a built in debt predictor. If you want help after filling in the form then just send it to us and we will get back to you. You will find the budget form here


Need to ask a question about log book loans? If so then go to our forum


For no nonsense advice just submit the short form and Mike or one of his team will get back to you.

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