Logbook loans sprang to life in the late 90s with the first active lender (Mobile Money) arriving in 1998. The controversial Logbook Loans brand was formed shortly after in 1999. They would go on to become the dominant sector force for many years. This business that was controlled by former footballer Iain Shearer would however eventually crumble. As far back as 2009 it was determined that their credit licence would be revoked. The key issue was fake threatening legal letters being sent out to customers. That company headed for administration, but the brand/site would live on when Hermes Property Services purchased. Hermes later merged with Loans 2 Go in January 2015 that quickly created the clear market leader.

This subprime sector isn’t in great shape these days. This is the first time that we have compared lenders across a field whereby not one single competing site had an Alexa UK rank. Logbook lending did look to be in a good place back in 2014 when the FCA valued the industry at £76 million. In this year 52,580 Bill of Sales were recorded, but moving forward these tallies would quickly fall. Many firms also had networks of localised outlets to speed up the process, but these days they simply send reps your way. It isn’t clear why public demand has dropped off. We’d hazard a guess that expensive costs and poor media press have been major contributors.

About: Niche

This type of loan is secured against a vehicle’s logbook. This is your V5C document that was previously called V5. Agreements are placed on various vehicles such as caravans, motorbikes, vans etc, but most commonly on cars. A Bill of Sale is signed alongside a credit agreement. The V5C is handed over during the contract and if there is any repayment issues then the legal right for repossession is granted. Due to the law, in Scotland this type of contract would switch to hire purchase. Logbook loans for older cars are available, but a 10 year limit is common. You’ll need a fully insured motor free (or nearly clear) of finance that is also MOT’d and taxed.

It is important not to get mislead by the giant promoted loan sums of say £50,000. Whilst said figure would be possible, each lender is actually lending a percentage of your car’s current trade value. This percentage tends to float between 50% and 70%. The most intriguing feature of V5C lending is that very poor credit is always considered. For many years no credit checks were widely advertised. Most circumstances are considered so long as affordability can be demonstrated. Self-employed workers for instance make up a sizeable percentage of customers (as their only choice). Acceptance rates may be high, but market pricing is very high and this shouldn’t be the case for secured contracts.

Notes…

Alexa.com: Comparison listings are sorted by traffic rankings. Groupings: 1) Global ranks and 2) Unranked (sorted alphabetically). No local ranks achieved.

Amounts: Borrowing amounts displayed are complete ranges (across every term available).

Closures: AutoPawn, Gissaloan, MotoLoan & RocketCash.

Examples: £1000 costs have been compared over both 12 and 18 months. The latter is due to select lenders starting terms from 18m.

Pricing: Costs were taken directly from lender sites as printed. Some firms appear to round off figures whilst others don’t and so exact costs may be out by a few pence here and there. Some companies also have separate prestige products. This is specific to high-end motors and so would only make up a micro area of this market. With standard products, it is high-end cars that would be seen as exceptions on required ages (this is why (exc) is noted above).

Best Prime Deal

5) Maxcroft: £840

Feefo.com (12 Month Data)

3) Car Cash Point: 93% (2100+)

Prime: MotorKitty

MotorKitty is the newest lender to arrive in this niche back in 2016. The founder was Damon Hirschl after he left the successful Varooma venture that he also founded. Kitty got off to a great start on the traffic front, but this didn’t last long and as it stands their site is now unranked on Alexa.com that is never good to see. There is no doubt that their promoted prices are impressive. They offer a variable range based on your score. This range for £1000 per year is £200 (excellent) up to £750 (very poor). Paying £200 is great value whilst £750 itself is the 3rd cheapest subprime deal and so they are competitive.

Subprime: Varooma

For the main recommendation, the 2 bad credit lenders that stand out are Loans 2 Go and Varooma. These are considered as the most established sector brands with good market feedback notched up between them (L2Go has 1000+ reviews on Feefo scoring at 88% whilst Varooma’s Trustpilot score is 94% from 3900+ reviews). These companies importantly don’t impose limits on your car’s age. The decision between the pair was simply made on pricing. For £1000 you’d pay £700.04 with Varooma whilst L2Go would ask for £1320 and so Varooma is the logical choice. If you’re score is fair then it would of course make sense to firstly try MotorKitty for an improved deal.

Last Update: June 1st, 2019