A logbook loan by definition is a loan against a vehicle, such as a car, van or motorcycle, that has value. As the owner of the vehicle, you pledge the vehicle as collateral to secure a loan. You have continued use of the vehicle, but it is now the property of the lender as you have signed the logbook over to them. Once the loan is paid, the vehicle is signed back over to you.

An example may be you have a car worth £8,000 and wish to borrow £2,000. The lender gives you the money, you give the lender the rights to your car. If you fail to meet the payments for the loan, the lender can repossess the car.

Many of the credit agreements for logbook loans also carry a separate for called a “bill of sale”. When this is registered with the courts, it is then recognised by law.

While a logbook loan can be an option for someone with bad credit, there may be alternatives, as logbook loans can carry a high interest rate. This in addition to you may lose your car if you fail to pay the loan back.

Black Box Logbook Loans

One way to save money on your car insurance is to have a “black box” or telematic box installed on your car. The box monitors your driving, things like speed, braking, cornering, etc, and if you are a safe driver this can save you money with your insurance, as all these details are reported back to your insurer.

However, these black boxes can also set-up to be used as a “kill switch” to disable the car.

A lender could require such a device be placed on a car that is pledged for a logbook loan or other secured loan. You fail to meet the required payments, they disable your car.

There are obviously many legal issues with this, such as disabling a car and leaving the driver stranded, what if the car is needed for an emergency, etc. As you can see, this is a very complicated area. Black box financing is here, but usually used to remind the driver they have a payment due.

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