What does logbook loan mean on a car?
A logbook loan is a secured loan where a vehicle is used as collateral. The lender takes possession of the vehicle's V5C registration document (logbook) and retains a legal interest in the vehicle until the loan is fully repaid. If payments are not made, the lender can repossess the vehicle. Logbook loans are recorded in official databases and appear on vehicle history checks.
Why logbook loan matters to buyers
Ownership risk
If you buy a car with an active logbook loan, the lender retains a legal interest in the vehicle until the debt is repaid. The lender can repossess the vehicle if the seller defaults on payments, leaving you without the vehicle or your money.
Legal complications
You cannot obtain clear title to a vehicle with an active logbook loan until the debt is fully settled. The lender retains a legal interest in the vehicle, which can prevent you from selling the vehicle or transferring ownership properly.
Financial liability
If the seller defaults on logbook loan payments after you purchase the vehicle, you may lose the vehicle through repossession. You have limited legal protection as a buyer if the logbook loan was not disclosed.
Resale difficulties
You may struggle to sell a vehicle with an active logbook loan, as buyers will be deterred by the finance record. This can affect the vehicle's resale value and your ability to sell it in the future.
What logbook loan indicates
A logbook loan is a type of secured loan where the borrower uses their vehicle as collateral. The lender takes possession of the vehicle's V5C registration document and retains a legal interest in the vehicle until the loan is fully repaid. The borrower can continue to use the vehicle while making payments.
During the logbook loan period, the lender has the right to repossess the vehicle if payments are not made. The borrower remains the registered keeper and can drive the vehicle, but does not have clear ownership until the loan is settled. Logbook loans are typically used by borrowers who may have difficulty obtaining other forms of credit.
Logbook loans are recorded in official UK finance databases and remain visible on vehicle history checks until the loan is fully repaid. This information helps buyers identify vehicles with active logbook loans before purchase.
What to check before buying a car with logbook loan
- Run a vehicle history check to identify any active logbook loans
- Verify the seller has settled the logbook loan before completing the purchase
- Request proof of logbook loan settlement from the lender
- Do not complete the purchase until you have confirmation the logbook loan is cleared
- Verify the seller has the V5C registration document in their possession
- Check the vehicle's registration documents match the seller's identity
- Consider walking away if the seller cannot provide proof of logbook loan settlement
- Be cautious of sellers offering vehicles at unusually low prices, which may indicate hidden finance
How a vehicle history check helps
A vehicle history check provides official records from UK databases, including logbook loan information. This helps buyers identify if a vehicle has an active logbook loan before purchase, protecting against repossession risk and ownership disputes.
Sellers are legally required to disclose active logbook loans, but some may fail to do so. A vehicle history check provides independent verification from official sources, helping buyers make informed decisions and avoid purchasing vehicles with undisclosed finance obligations.
What a Carpeep vehicle history check can show
- Outstanding finance agreements, including provider name, agreement type, and start date
- Write-off category (Cat S, Cat N, Cat A, Cat B, Cat C, Cat D) and date of write-off
- Theft and recovery status, including whether the vehicle has been reported stolen
- Mileage inconsistencies and potential odometer rollbacks, automatically flagged
- Keeper changes and number of previous owners
- MOT history timeline, including all test dates, pass/fail results, advisories, and recorded mileage at each test
- Registration plate changes and vehicle identity verification
Frequently asked questions
Can I buy a car with an active logbook loan?
You should not buy a car with an active logbook loan unless the seller settles the debt before you complete the purchase. If you buy a vehicle with an active logbook loan, the lender may repossess it if the seller defaults on payments, leaving you without the vehicle or your money.
What is the difference between logbook loan and hire purchase?
With hire purchase, the finance provider owns the vehicle until payments are completed. With a logbook loan, the borrower owns the vehicle but uses it as collateral, with the lender holding the V5C document. Both create a legal interest in the vehicle until the debt is settled, which appears as outstanding finance on vehicle history checks.
How can I check if a car has a logbook loan?
You can check if a car has a logbook loan by running a vehicle history check using the vehicle's registration number. The check will show any outstanding finance agreements, including logbook loans, with the provider name, agreement type, and start date. This information comes from official UK finance databases.
Do sellers have to disclose logbook loans?
Yes. Sellers are legally required to disclose if a vehicle has an active logbook loan. However, some sellers may fail to do so. A vehicle history check provides independent verification from official sources, helping buyers confirm finance status regardless of seller disclosure.
What happens if I buy a car with a logbook loan?
If you buy a car with an active logbook loan, the lender retains a legal interest in the vehicle. If the seller defaults on payments, the lender may repossess the vehicle. You may lose both the vehicle and the money you paid, with limited legal protection if the logbook loan was not disclosed.
Can logbook loans be transferred to a new owner?
Logbook loans cannot typically be transferred to a new owner. The seller must settle the logbook loan before selling the vehicle. If you discover a logbook loan after purchase, you may be able to contact the lender, but you have limited legal protection. It is always safer to verify finance status before purchase.