- Secured on
- Your vehicle, which you keep using
- Legal form
- A bill of sale gives the lender rights over the vehicle
- Main risk
- Repossession and sale if you default
- First step
- Speak to the lender and get advice before missing payments
On this page
How a logbook loan works
With a logbook loan you borrow money using your vehicle as security. The lender takes a legal interest in the vehicle through a bill of sale and you keep driving it while you repay. These loans usually carry very high interest rates compared with other credit.
What happens if you cannot pay
If you miss payments, the lender can follow a formal process that can end with it taking your vehicle and selling it. You may still owe money if the sale does not cover the debt. Lenders must follow legal rules, including sending notices before taking action, and the FCA expects them to treat customers in difficulty fairly. If you think the lender has not followed the rules, get advice.
Talk to a free adviser first
An adviser can look at your whole budget, deal with creditors for you and explain which option suits you. Get free debt advice.
What you can do
- Contact the lender early. Ask for a lower payment, a payment break or a longer term.
- Check your agreement for the interest rate, any early settlement terms and what happens on default.
- See whether cheaper credit, such as a credit union loan, could pay off the logbook loan. Check the cost carefully.
- Do not sell the vehicle without talking to the lender, as it has a legal interest in it.
- If you owe other debts, ask an adviser how to handle them together. Breathing Space can give you 60 days to get advice.
Keeping or giving up the vehicle
If you need the vehicle for work or care, protect it by prioritising the loan. If you do not need it, an adviser can help you weigh up whether to hand it back and what you would still owe. Do not hand it back without understanding the consequences.
Unsecured debts can sit in a debt management plan or an IVA, but secured debts like this one are treated differently and usually need to be kept up if you want to keep the vehicle.
If you were mis-sold
If you think the loan was unaffordable or the lender treated you unfairly, complain to the lender and, if you are unhappy with its response, to the Financial Ombudsman Service. Free advisers can help you with this.
Frequently asked questions
Can a lender take my car without telling me?
Lenders must follow legal rules and give proper notice before taking action. If a vehicle is taken without notice, get advice immediately.
Is a logbook loan the same as car finance?
No. With car finance the finance company owns the car until you pay. With a logbook loan you own the vehicle, but the lender holds a legal charge over it.
Will I owe money if the car sells for less?
Possibly. If the sale does not cover the debt and costs, the lender can pursue you for the shortfall.
Can I get a cheaper loan to pay it off?
Perhaps, for example from a credit union. Check the total cost and make sure you can afford the new repayments.
Does a logbook loan affect my credit file?
Yes. It can appear on your file, and missed payments or default can harm your record.
This guide gives general information and is not personal advice. Rules and limits change, so check with a free adviser before acting. Last reviewed 11 November 2026.