Your Complete Guide to Loans Using Car as Collateral

A logbook loan, also known as a car title loan or secured loan against car, allows you to borrow money against car equity while continuing to drive it. You temporarily sign over your vehicle's logbook to the lender as security, and if you can't repay, they can repossess your car. These loans using car as collateral are typically short-term and come with very high interest rates, often exceeding 400% APR, making them one of the most expensive borrowing options available.

When you apply for a vehicle collateral loan, the lender assesses your car's value and typically offers 50-70% of that amount. You sign a bill of sale giving them ownership rights while retaining possession of the vehicle. You make logbook loan repayments over the agreed term, usually 12-36 months. If you miss payments, the lender can legally take your car and sell it to recover their money, even if you've already paid back more than you borrowed.

These terms essentially refer to the same product - using car as security for loan to borrow money. In the UK, they're commonly called logbook loans, while in the US they're known as car title loans. Both involve using your vehicle as collateral for a secured loan on car, allowing you to access cash while still driving your vehicle, but risking repossession if you default on payments.

Generally, you cannot get a logbook loan financed car if you're still making payments to another lender, because you don't fully own the vehicle yet. Most car collateral loan providers require you to own the car outright with no outstanding finance. Some lenders might consider it if you have significant equity, but this is rare and would require settling your existing finance first, which defeats the purpose for most borrowers.