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i The advice on this page applies to residents of England, Wales and Northern Ireland only.

Logbook loan debt. Can they take my car?

Logbook loans are a way of borrowing money using your vehicle as security. You hand over ownership of the vehicle to the logbook loan company until the loan has been paid back.

You can continue using the vehicle, but if you don’t pay the loan your vehicle can be taken away and sold.

Logbook loans are normally paid back over 1 to 3 years. The amount you can borrow depends on the value of your vehicle and is usually £400 to £5,000.

The rate of interest on logbook loans is very high, often 300% APR or more. You’ll often pay back more than double the amount you borrowed.

These loans are very expensive way to borrow money so you should think very carefully before taking one out. If you’ve been refused loans from other companies and you think a logbook loan is your only option, we recommend you get free and impartial debt advice before you make a decision.

How does a logbook loan work?

In England, Wales and Northern Ireland two separate agreements are used when a logbook loan is issued:

  • A personal loan agreement is signed, setting out how much you borrow and how it is to be repaid. This is regulated by the Consumer Credit Act
  • A ‘bill of sale’ agreement is also signed. This transfers the legal ownership of your vehicle to the creditor until the last loan payment is made

Most companies will also ask you to hand over your V5 logbook and other vehicle documents as well. Even if you don’t give them these documents, the vehicle still belongs to them and you can’t legally sell it.

Logbook loans are not common in Scotland. Bills of sale are not valid under Scottish law, so logbook loan companies don’t have the same legal powers as in the rest of the UK.

Logbook loan arrears

If you miss payments to your logbook loan, your creditor will contact you.

If you don’t make up the missed payments, a default notice will be issued giving you 14 days to bring the account up to date. If you don’t, the account will default and the creditor can take further action, including repossessing the vehicle, at cost to you.

If you can’t make up the missed payments and you don’t want to lose the vehicle, contact us for advice.

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Logbook loan repossession

If a logbook loan has defaulted, the creditor can repossess your car. They must wait a minimum of five days after the account has defaulted before they can take the vehicle away. They don’t need to take you to court to do this.

They’ll usually tow away the vehicle. There are no limits on the time they can do this, so they may arrive late at night or very early in the morning. This is normally done by specialist debt collectors or bailiffs (enforcement agents), and they can use force to repossess the vehicle.

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

After the logbook loan company has taken your vehicle they’ll auction it. If the sale price at auction isn’t enough to cover the whole debt, you’ll have to pay the ‘shortfall’. You can treat this like any other non-priority debt, like credit cards and personal loans, and offer to pay it back in instalments at an amount you can afford.

If the sale price of the vehicle is more than the total you owe, the difference must be paid back to you.

Logbook loan code of practice

Most logbook loan companies have signed up to a code of practice produced by the Consumer Credit Trade Association (CCTA)

The code includes some extra protection for consumers. Creditors who are signed up to it will:

  • Consider reducing your loan payments if your circumstances change
  • Let you hand over the vehicle at any time to settle the debt if you can’t pay it
  • Only repossess your vehicle as a last resort
  • Give you two weeks after repossession to pay off the debt and get your vehicle back

If a logbook loan company displays the CCTA logo, they must follow this code. If they don’t, you can complain to the CCTA.

Selling a logbook loan vehicle

Once a logbook loan has been made the vehicle doesn’t belong to you again until you’ve made the last payment.

As the vehicle is not yours to sell, you’re breaking the law if you do this, and the creditor may take criminal action against you.

If you do sell the vehicle, the logbook loan company can repossess it from the new owner. They don’t need a court order to do this. If this happens, the person who bought the car from you could take court action against you to get their money back.

Logbook loans are all recorded on a database called the HPI Index which anyone can check before they buy a vehicle. This means if you try to sell a vehicle with an outstanding logbook loan, no dealership will buy it from you.

Logbook loan debt help

If you’re struggling to make the payments to a log book loan, contact us for free, confidential debt advice. 

Our online debt help tool, Debt Remedy, will provide you with the best solution to your debt problem. Or you can call our Helpline (free from all landlines and mobiles) and talk to one of our advisors.

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