No one can predict when financial emergencies will hit. In an ideal world, everyone should have an emergency fund to meet these financial circumstances. Unfortunately, more people in reality have little to no savings. In this case, one alternative for quick cash financing is to apply for a personal loan. One type of loan that is popular in the UK today is called a logbook loan.

What is a logbook loan?

A logbook loan is a personal loan offered in the UK for customers with bad credit. It is a secured loan that requires a security or collateral. As its name suggests, you have to be a car owner to be eligible for this type of financing. The loan will be secured against you vehicle, which means that you’re putting your car at risk of repossession.

Once approved for a logbook loan, your lender becomes the temporary owner of your vehicle. In the event that you cannot afford to pay the monthly repayments anymore, the lender has the option to recover your car as payment for your loan balance.

What are the requirements?

With no credit check needed, the requirements for a logbook is pretty simple and straightforward. As mentioned, you will have to be a car owner in order to avail the loan. Naturally, you must be of legal age and a resident in the UK to be eligible.

When applying for a logbook loan, your lender will require you to submit a set of documents, which will include your vehicle’s logbook document, insurance details and MOT certificate. In addition, you’ll also have to provide proof of steady income along with proof of identification, proof of employment, billing address and bank details.

What can you use the logbook loan for?

Most logbook loan lenders do not require borrowers to disclose the reason behind the loan. Whether you’ll use it to pay your rent or cover an overdue bill, it’s all up to you. So long as you meet the requirements, you can avail the loan and use it any way you want. But ideally, it’s best to use and reserve the loan for financial emergencies such as medical expenses, car repair, etc.

How much can you borrow?

Since there’s a security requirement, the loan amount is larger than what unsecured personal loans can offer. In general, you can borrow between £500 and £25,000. The maximum amount you can apply for will depend on two major factors. One is your income and the other is your car’s official trade value. In most cases, lenders let you borrow up to 70% of your car’s trade value.

What is the cost of the loan?

Considering that the loan caters especially to people with bad credit, the cost can be quite steep. The average representative APR, for example, is set at 400% or higher. APR which also means annual percentage rate is a financial concept lenders use to represent the cost of the loan on annual basis. This means that the APR is already inclusive of your logbook loan’s interest rate, administrative fees and other related charges. For a better understanding of how APR works, go to

Where can you apply for a logbook loan?

More and more lenders are now offering the product online. If you own a vehicle and you want a personal loan, all you have to do is apply online. You’ll just need to fill out the online application form. The lender will assess your personal circumstance and contact you for further instructions. You can also enjoy your lender’s quote service at no charge at all. There’s no obligation to proceed with the loan if you don’t want to.