What are the risks associated with logbook loans?

Are logbook loans for everyone?

You probably have heard a person who does not have a good credit score ask whether logbook loans are a safe bet considering that mainstream financial lenders have thrown their application to the dustbin more than they can care to count. This is a major dilemma for most UK citizens with a poor credit score seeking a better loan product in times of emergencies. Well, logbook loans are ideal for individuals who cannot seem to get approved for a loan through conventional means. Granted, logbook loans have become popular across the UK owing to the fact that they do not require a person to have a good credit score, their basic requirements and approval is mostly within 24 hours.

The fact that a person has up to 78 weeks to make repayments is something that has also largely contributed to the immense popularity of logbook loans. The greatest appeal for logbook loans has to do with the fact that they are processed in record time for individuals with a poor credit history. However, this is not to say that there are no risks associated with these loans. There are a number of risks you should be aware of, some of which we are going to highlight below.


There is nothing that gives a borrower sleepless nights more than the thought that their cherished car would be repossessed because they are unable to meet their logbook loan obligations. Unfortunately, this is the reality especially when a person falls far behind in repayments. Repossession is always a measure of last resort taken by lenders when the borrower is unable to pay their logbook loans. What happens is that when a borrower signs a bill of sale document when taking out a logbook loan, their car becomes property of the lender. What this means is that the lender is the temporal owner of the car for the duration of the loan and is therefore legally allowed to repossess the car should the borrower fail to meet their monthly obligations. As such, should the borrower be unable to furnish the loan, the lender has the legal right to repossess and sell the car in order to recoup their money.

High interest rates

If you are planning to apply for a logbook loan, be ready to pay high interest rates as compared to ordinary loans. The average annual percentage rate for logbook loans is somewhere in the region of 400%. To put that into perspective, let’s assume a logbook loan customer takes out a loan of £1,500 expected to be repaid over a period of 78 weeks and making weekly payments of £55. Such a borrower would end up repaying around £4250 which is without a doubt more than twice the principal amount. In light of this, it goes without say that logbook loans are very expensive.

Well, the above mentioned are just the main risks. Other risks are of course further worsening of a person’s credit score not to mention harassment calls from debt collectors!