Other unsecured loan options – The logbook loan

At CCLF Loans, we make sure we are up to date on all the unsecured loan options available in the United Kingdom today. That way, we are in a better position to inform anyone who wants information about these various products should they need a loan, especially when they have a bad credit rating.

One such product that people often turn to instead of a guarantor loan is called a V5 or logbook loan. Here, your vehicle acts as security for the loan company as opposed to someone signing as a guarantor.

Let’s take a closer look at what logbook loans have to offer.

Logbook loans explained

If you own a vehicle that is fully paid off, is fully and comprehensively insured and is less than 10 years old, you may take out a logbook loan against it. And the vehicle need not only be a car. It could also be a truck, motorcycle or even a caravan. The thing is, it has value and this value is used by the loan company as a form of security when they give you a logbook loan.

So how exactly does this all work? Well, when you apply for a logbook loan, the loan company will first want to assess your vehicle. Their experts will give it a thorough inspection, noting the overall condition of the bodywork, the condition of the engine and the mileage driven. Once that is complete you will be offered a loan based on the condition of your vehicle, but never more than 50% of its total value. So if your car is worth £50 000, you will be offered a loan of £25 000. Note that logbook loans usually range from £250 to £50 000.


For you to close the loan deal, you will need to provide a number of documents. These include the following:

  • Proof of identification
  • Proof of residence
  • Proof of employment
  • Banks statements
  • Your vehicle MOT certificate
  • Proof of insurance

How long does it take to process a logbook loan?

Once the loan company has all the relevant documents they need and have assessed your vehicle and made you a loan amount offer, it normally takes less than a day for them to finalize your application and pay the money into your account. This quick turnaround time is one of the reasons why the logbook loan is becoming more and more popular throughout the United Kingdom.


What else should I know about a logbook loan?

During the course of the loan, you are still free to use your vehicle, but if you should miss a payment, the loan company legally has the right to repossess it and sell it to recover costs.

Of course, this is only done as a last resort. If the vehicle is sold for more than the loan amount, any extra money made will be paid into your bank account. The most important thing to note here is that you should not miss out on a repayment and if you think that you might, make sure you speak to the loan company beforehand so that they can try and help you out in some way.

For more comprehensive information about logbook loans visit


Frequently asked questions about guarantor loans

As we often receive questions about guarantor loans, we have compiled a list of frequently asked questions for your convenience. If you still have a query after reading through these, please do not hesitate to contact our friendly staff who are more than willing to help you.

Can you offer suggestions for who make the best guarantors and why do I need one?

First things first. The main thing about your guarantor is that they should be 18 to 65 years old, hold a steady job and be able to prove their income. Normally, a family member or best friend is the best person to approach to be your loan guarantor. Take note, your spouse or partner generally is not allowed to be a guarantor.

The reason a financial institution will ask you to find a guarantor is basically because you have a bad credit rating and have missed various types of credit payments before that put you into that position. The guarantor then acts a security buffer for the company, giving them piece of mind as legally, the guarantor will have to pay your loan instalments should you miss one.

What documents do I need to apply for a loan?

There are a number of documents that both you and your guarantor will need to supply to the loan company when you apply for the loan. These include identification documents, proof of residence, proof of income as well as three months’ worth of bank statements to confirm your income and expenses.

If I get a loan, when can I expect the money in my account?

Most loan companies will take between 24 to 48 hours to pay the amount into your account. It often depends on banks clearing the amount of money quickly enough. Some take a day to do this, while others will do it immediately.  Take note that the money will not be paid into the account of the loanee but instead into the account of the guarantor. Discussion as to where the money is paid from that point on is of no consequence to the lending company but a matter between the loanee and their guarantor.

Ok, so the money has been paid into the guarantor’s account. When is my first payment due?

In most cases, the first payment will be due at the end of the following month. Say your guarantor received the money on the 20th August then you will be due to pay your first instalment on 30th September. Every month after that a payment will be made on the 30th of the month until the loan is finished and the amount loaned, plus interest, paid off.

I have come into some extra money. Can I pay that into the loan?

By all means, do! As a financial advisor, we recommend that not only do you pay an extra money into your tenant guarantor loan but that you also try to pay back slightly more each month. Even if this is only 10 extra pounds a month, it can save you a great deal of interest over the terms of your loan.

Will the monthly payments ever change?

No, they shouldn’t! All tenant guarantor loans should be set at a fixed interest rate. Make sure you read all the fine print and terms and conditions of the loan contract to see that this is indeed true.

This month has some unavoidable extra expenses. I don’t think I can pay my loan instalment!

Firstly, if you are sure that you will not be able to pay your loan instalment, don’t just leave things hanging. Make sure you contact your loan provider and inform them as well as your guarantor. Your loan provider, depending on how they operate, may be able to make an exception for one month. They usually do this by tagging on that payment to the end of the loan. Whatever you do, do not just ignore the fact that you cannot pay. It is your duty to inform everyone.


Can a guarantor opt of the agreement?

In most cases, even if the contract has been signed, a guarantor can opt out of the loan as long as the money has not yet been paid into their account. This also cannot just be done verbally and the loan company must be informed in writing. If the money is in the guarantor’s account, then nothing can be done about opting out of the loan.

Does the credit rating of the guarantor make a difference?

Indeed it does! The guarantor must have a positive credit rating and record to be able to sign surety on the loan.



I’ve been asked to be a guarantor – What factors should I consider before signing the loan contract.

As a company offering financial advice, we have seen the effect a poorly informed decision to sign as a guarantor on a tenant guarantor loan. If you are ever asked to sign as one for someone, it’s best to do some real thinking before you agree.

In this article, we are going to take a good look at the considerations you should undertake before signing as a guarantor.

First things first, however.

The definition of a guarantor

Normally, a guarantor is someone who has agreed to co-sign such a loan and by doing so, they agree to pay the loan on the person’s behalf should they miss an instalment. Usually, it is a close friend, more often than not a family member, but in some instances, we have even seen work colleagues agree to be guarantors for the person seeking the loan. This is not something we would recommend, however.

Remember, by signing as a guarantor, you are legally bound and obliged to pay the loan instalments if the person who received the loan amount defaults in any way.

Considerations before signing as a guarantor on a tenant guarantor loan

Now before you sign on the dotted line, there are a number of considerations that you should go through in great detail.

Begin by fully understanding what is expected of you. In a nutshell, you will pay if the loanee doesn’t. It is that simple and more importantly, you are legally bound to do so. If you have any queries about this, make sure you ask the financial institution offering the loan. Often, they will have a slight grace period for the loanee to come up with the money if they miss the payment but not all of them will have this.

Now ask yourself the question if you can indeed afford to take on the debt of an individual should they stop paying their loan and be difficult to track down. Believe it or not, we have seen families torn apart by a poorly judged agreement to become a guarantor on a tenant guarantor loan. In one instance, a mother signed for a son who had a substance abuse problem. Within two months, the money (which he was going to use to further his studies) had mostly been used up and the son had jetted off to the USA leaving the mother to pay back the loan.

Trust plays an important part in a loan such as this. Determine if the person taking out the loan can be trusted to make every attempt to pay back monthly instalments. In times like this, trust your gut feeling. We have found that often, it is the right thing to do. If you are being pressured into acting as a guarantor by a member of your family, rather opt not to sign the loan contract, even if they make you feel guilty. Emotional guilt is a strong thing however, do your best to overcome it otherwise you might sit with a massive financial burden. Remember, there is nothing in it for you when you sign as a guarantor, just the knowledge that you are helping someone.


If you have any queries about these loan products, becoming a guarantor or any other general financial questions, please do not hesitate to contact one of our staff. We will be more than pleased to offer you sound advice.