Glossary: Logbook loan
A logbook loan is a way of raising cash with the loan secured against the borrower’s vehicle and the logbook held by the lender as security against the loan. They are aimed at people with poor credit ratings who may have outstanding county court judgements (CCJs), individual voluntary arrangements (IVAs) or are bankrupt as loans are approved without credit checks being carried out. The vehicles should be no more than eight years old with no finance outstanding. They must be insured and taxed and the potential borrower must have a regular source of income. Like payday loans, this type of borrowing is expensive, with APRs of 500%.
Short-term cash loans designed to be borrowed mid-way through the month to tide the borrower over until they next get paid, whereupon the loan is settled. Generally used by people with bad credit ratings and/or no access to short-term credit such as an overdraft or credit card. Like logbook loans, this type of borrowing is hugely expensive: the average APR on payday loans is well over 1,000% and in some instances can be considerably more.