How exactly does a logbook loan work?

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Logbook loans are becoming a very popular way to lend money in the United Kingdom, especially over the past five years. Many people are turning to them as a way to get cash, especially in times of emergency.


But how exactly do these loans work? What do they entail?

How it all works

If you have a car, a motorbike, a caravan or truck, you could be eligible for a logbook loan. Your vehicle has value, and a logbook loan sees you given money against that value. During the duration of the loan, your car acts as security for the loan. This means the lender keeps your vehicle logbook or V5 document.

Effectively, they own the vehicle for the duration of the loan. This protects them should a payment (or multiple payments) be missed. They then have a legal right to sell the vehicle to recoup any costs. If any extra money is made during the sale, it will be given back to the vehicle’s original owner.

How much can be borrowed with a logbook loan?

We offer logbook loans from £500 to £50 000. Of course, the amount that you qualify will depend on a few things.

Once our assessors have had a look at your vehicle, we will assign a value to it. We then will give you a loan up to 50% of this value while you continue to use it on a daily basis.

What documents does a loan applicant need?

When applying for a logbook loan, you will need to bring a number of documents to complete your application. These include:

  • Proof of address (a utility bill will suffice)
  • Proof of income (your previous three months wage slips)
  • Bank statements (for the previous three months, or if you are self-employed, then six months)
  • The log book or V5 document for your vehicle
  • The MOT certificate for your vehicle
  • Proof of comprehensive insurance

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Your vehicle must be comprehensively insured. This again helps to protect our investment against accidents, weather damage, and other eventualities. More importantly, you must own the vehicle and it must be fully paid off. It cannot be owned by a spouse, sibling or parent.

Apply today!

So if you are needing cash in a hurry and you have a fully paid off, comprehensively insured vehicle, apply here now .

Why hiding debt from your partner is a bad thing


So you have decided to take out a guarantor loan because you need some cash in a hurry. You even have secured someone to act as a guarantor. You have done all the research, found the best rates, know what your monthly repayments will be and you are more than happy you can afford it.

But have you told your partner yet?

Any relationship is based on trust. When it comes to a form of debt, people often choose not to tell their partners? Why, well maybe its embarrassment, or maybe they feel they must deal with the debt alone (a really bad idea if you share all other monetary obligations).

Worried Couple Discussing Domestic Finances At Home


Your debt becomes their problem

A recent study has found that across the United Kingdom, people are keeping as much as £41 billion debt secret from their partners. So what implications does this have? Well, if you have debt and pass away or are declared insolvent, did you know that your partner will be liable to settle that debt. It seems a bit unfair to have that hanging over their head when they didn’t know about it in the first place! Not only that, but should they struggle to pay it (a distinct possibility when they knew nothing about it and would not have planned for it), their credit score will be affected negatively.

Always be open in monetary discussions, even those about debt

So what is the best course of action? Well, as we have mentioned above, many people are embarrassed about any debt they might incur, but it is necessary to disclose it to your partner. Not only is it the right thing to do, it’s just fair even though it might be a little awkward at first.

Perhaps get a financial advisor involved to draw up a plan of action when it comes to both parties’ finances. That way, you can both be totally open with each other. Even something like hidden savings should be disclosed, even though you might be trying to surprise him/her with an overseas holiday! Disclosing all your financial obligations will also open a whole new level of trust in the relationship, something that can bring parties even closer together.


So don’t be afraid! Disclose your debt to your partner, it is the right thing to do.


Guarantor loans – Frequently asked questions


As a loan provider, we at Square 1 Loans have been asked pretty much every question there is about loans and loan products. Our staff are the best in the business and they can answer anything you throw at them. But before you do, have a read through our frequently asked questions to see if we have it covered here. These are the questions that come our way most often.

Please can I apply for a loan without a guarantor?

We have other loan options that do not require a guarantor such as a logbook loan where your vehicle acts as collateral. If you want to apply for a guarantor loan, however, you need a guarantor. Should you not be sure who to ask to be yours, consider a family member, perhaps your parents or a sibling?

What characteristics should my guarantor have?

Well, they should be between the ages of 18 to 70, own a home, and perhaps most importantly, have a good credit standing.

Ok, so my loan has been approved. How do the repayments work?

Well, here you have options. Repayments can be either weekly or monthly, depending on your preference. We suggest that you set up automatic payments that come off your account either at the end of the week or month. In this way, you won’t have to worry about making manual payments yourself, something that is very easy to forget and can have you defaulting on your loan.

Do the repayments stay the same?

Yes, any guarantor loan you sign for will have the same monthly payments as the interest rate charged on the loan is fixed. So even if interest rates rise, your repayments will stay the same for the length of your loan.

Can I pay the loan off early?

If you have some extra money, we suggest you pay it into the loan whenever you can. This will help you to pay the loan off early and save you cash on the interest. If you can afford to pay off the whole loan because you received a large amount of money (say an inheritance), you can do that as well. There are no penalty fees for paying your loan off early unlike many other lenders charge.

When my loan is approved can I get cash?

Although you are able to get the loan as a cash amount (for anything up to £5000), we really would suggest you rather have us pay the money into your account. This is far safer and will only take up to a maximum of 24 hours before it reflects on your account. We do the transaction straight away, but some banks will take a while before they clear the money.

What are the consequences of missing a payment?

Firstly, please try not to miss a payment. If you are struggling to make one for whatever reason, come to talk to one of our staff and we can try and help you in some way that month. If you do miss a payment, then there is a chance that penalties will be added to your account. If you miss multiple payments, we will then contact your guarantor for the money as they signed surety for you on the loan.

Can I cancel the loan?

If for any reason you decide to cancel the loan, you have 7 days in which to do so. Please inform us of your intentions to cancel and arranged to have the full amount of the loan paid back into our banking account. From there, you will need to complete some paperwork that both you and your guarantor must sign.

I am struggling to find a suitable guarantor. What is expected of them?

They will need to sign surety for the loan which means they will make payments on your behalf should you miss any. That is why it is important to find a suitable guarantor that will agree to do this. In all our dealings with these loans, we have found that family members make the best guarantors.

I am embarrassed to have to ask someone to be my guarantor. What type of information do they see regarding the loan?

As they are signing surety on your behalf, your guarantor has to be privy to a whole range of information. This includes the terms and conditions of the loan, the loan amount, the interest charged as well as all other fees and charges, if applicable.

Will the loan change the credit score of a guarantor?

No, it will not as long as you pay the monthly installments or they pay them if you make a default. In turn, if they default on their obligation to pay should you not be able to, it will affect their credit score in a negative way.

Can a guarantor pull out of the loan deal?

No, once everything is signed and the money paid into your account, the guarantor may not pull out of the loan deal unless you are still in the first week of the loan period. Much you like you can decide to scrap the loan within 7 days, so can your guarantor. The money must be paid back into our account in full and some documents signed if this does happen.