# How to use a logbook loans calculator

How to use a logbook loans calculator, calculate weekly and monthly interest repayments, calculate how much you have to pay back and how long you can borrow the money for.

How to use a logbook loans calculator, calculate weekly and monthly interest repayments, calculate how much you have to pay back and how long you can borrow the money for.

Logbook loans are loans where your car is used as security against the loan, you can borrow up to 80% of your cars value as a loan, so as an example if your car was worth £10,000 then you can calculate how much you can borrow by typing this into your calculator: 10,000 – 20% = £8,000 so you can borrow £8,000 against your car which is worth £10,000.

As another example, if your car was worth £1,000 then the calculation you would type into your calculator would be £1,000 – 20% = £800, a final example to make sure you have got it, if your car was worth £5,000 then the calculation you would type into your calculator would be £5,000 – 20% = £4,000.

When you take a loan out you will at the very least have to repay the amount you have borrowed but you also have to repay interest on the loan, it is the cost of borrowing money that is known as the interest and for logbook loans (and all loans actually) the interest is calculated as APR (Average Percentage Rate), the APR will be a percentage figure of the loan amount that your borrowing.

Now, let’s first work out the interest that your pay in a loan with a few examples, so if for example you borrowed £8,000 as a loan amount (and remembering that the amount you borrow is 20% less than your car is worth, so in this case your car is worth £10,000 and you can borrow £8,000), so the APR will be quoted as a percentage, if the APR rate is 20% and I’ve made this interest rate up as an example, then the calculation to find out how much interest you would be paying back over the life of the loan would be £8,000 + 20% = £9,600.

So in this fictitious example the cost of borrowing the money would be £9,600 - £8,000 = £1,600, now when you take the loan out your borrowing the money over a loan term, that’s how many months or years you have to make monthly or weekly loan repayments, so if you took the money out for 5 years and agreed to make monthly repayments for 5 years then the total monthly repayment that you would have to make including paying back the money you had borrowed and making interest repayments would be £9,600 / (5 * 12) = £160 per month.

To put the above calculation into your calculator first you must work out how many months you are borrowing the money for that’s the bit in brackets, the (5 * 12) bit, because there are 12 months in a year and your borrowing the money for 5 years, so the total number of months you have borrowed the money for is 5 * 12 = 60 months and including interest repayments and paying back the total amount of money your borrowing which is £9,600 you could rewrite the above calculation as £9,600 / 60 months = £160 per month, so each month for a total of 5 years you make a payment of £160 per month to pay back the logbook loan that you took out for £8,000.

Whilst that’s the total amount of money that you have to pay back (£9,600) the total cost of the loan (calculated from the interest rate known as APR) is £1,600, so the cost of this fictitious (made up example) loan to you each month is £1,600 / 60 months = £26.67 per month I’ve rounded up the 0.6666 percent recurring to 0.67 and the logbook lender would probably round that up to £27 and make the very last loan repayment smaller instead.

Whilst this calculation shows the total amount that you must pay back as £160 that is including the £26.67 interest payment, don’t accidentally think that you must make a separate loan repayment and interest payment, the total amount that you must pay back is still £160.

Of course, this is a made-up example to show you the figures and how you can calculate the cost of your loan using your own calculator (if you can’t find a real calculator, because who has calculators anymore, then you can use the calculator on your computer or on your mobile phone).

The above made up example used a repayment frequency of monthly, you can also pay back weekly, so to work out how much the same loan would cost on a weekly basis you can enter the following into your calculator £9,600 / (5 years x 52 weeks) = £9,600 / 260 weeks = £36.62, that’s the exact amount including loan repayment and interest repayment that you would pay each year for 5 years over the life of the loan if you borrowed £8,000.

Whether you pay weekly or monthly is often a choice on the online application form, some lenders will only offer weekly repayments and they are the lenders that want to lend you the money in person (a doorstep loan), rather than lending you money online, when you request an online quotation by entering your car registration number (number plate), your be offered a choice of continuing the loan application online, having a loan advisor call you back to answer your questions and take you through the loan application over the phone or you can arrange for a loan advisor to visit you at home personally, the loan advisor can then explain to you how the loan works and answer any questions you might have the loan advisor can then ask to see your cars documentation, your V5C car registration form that must show your name and address, your car insurance cover note and your MOT certificate if your vehicle is over three years old and requires an MOT.

If your applying online then your cars details will be automatically checked online as you make the loan application by automatically asking the DVLA and HPI databases for information about your car.

Note that with all these checks they are checks against your car and not against you, that’s because the loan is taken out against your car with your car as security against the loan, it’s similar to a personal loan where you have a guarantor to guarantee that you will repay the money, with a guarantor loan, your guarantor, usually your parents, guarantee to make the loan repayments if you are not able too, and a lender is often more lily to lend to you if you have a guarantor as it means you (or they) are more likely to pay the loan back.

Just like a personal loan (unsecured loan) with a guarantor, a logbook loan has a guarantor in that your car is the guarantee for the loan, fail to pay the loan back and your car may be repossessed by the lender and sold to repay the money that you have borrowed to the lender.

Indeed, it is because of the potential need to repossess a car and sell it if a loan is not paid back that means you can only borrow 80% of the vehicles value and not 100%, that’s because if the car is sold, the lender will want to sell the car quickly and be guaranteed that they get the exact money back for the sale that they lent you for the car, and by selling the car at a 20% reduction in price and only offering you 80% of your cars value the lender can insure that they are not ‘out of pocket’ if you default on the loan.

As well as checking with the DVLA that you are the registered keeper of the vehicle (because you can’t take out a loan on a vehicle that you do not own), the lender will also run a check against your car through the HPI database, this database tells the lender if your car has ever been written off by an insurance company (it might be fully repaired now and on the road again, but if it’s ever been written off then you can’t get a loan against your car).

The HPI check also tells the lender if there are any outstanding loans against your car, if you purchased your car on credit or have a logbook loan already against your car then you can only borrow money against the portion of your car that you do in fact own.

So for example, if you have just purchased your car on credit and are yet to make your first monthly repayment then you might not have paid back any money into the car (except maybe a deposit on your car), so if you don’t own any percentage of your car there is nothing to borrow, if on the other hand you had paid back half the loan and owned approximately half the car, I say approximately because as with the above interest rate calculations you can see that you also owe interest and this will lower the actual amount that you have paid back on the car because your also making interest repayments.

Then with half the loan paid off your be able to get a logbook loan on the half of the car that you own, the exception to this rule is that some logbook lenders offer a debt reconsolidation logbook loan where you can take out a logbook loan on a car that already has a logbook loan against it because you use the money your given to pay off the first logbook loan, the reason for doing this is to get a lower rate of interest and save money on loan repayments, it’s like getting your house re-mortgaged.

Your car must also be in what lenders refer to as a ‘roadworthy condition’, that means that you must have your name and address on the vehicle registration document (V5), car insurance, road tax and an MOT certificate, this insures that the lender is lending you money against a car that is actually on the road and being used each day.

If you have declared SORN and keep your car off the road, your need to put your car back on the road before you can apply for a logbook loan.

Because the money is lent to you against the value of your car (minus twenty percent), you are borrowing the second hand value of your car, logbook lenders will loan you from £250 to £50,000 against you’re car, so if you have a classic car that’s worth upwards of £50,000 your be able to get that amount of money with a logbook loan, at the other end of the scale if your car is inly worth a few hundred pounds you can borrow as little as £250.

Logbook loans being secured loans are trusted more than a personal or unsecured loan, this means that a lender given the choice of lending against a secured loan or an unsecured loan will choose the secured loan because it means they are guaranteed to get their money back, the car can always be sold if the borrower refuses to pay or cannot pay the money back and with a personal loan the borrower would have to be taken to court and the lender would have to get a CCJ against the borrower to force them to pay the money back, so much easier for a lender to lend against a secured loan.

If you have a bad credit rating because you have had bills to pay previously and failed to pay those bills back on time, every time you miss a payment of something, the details of the missed payment are reported to the credit reference agencies, too may notifications of missed or late payments and your credit score goes down until you have a bad credit rating and no lender will want to lend you money, logbook lenders are not required to report logbook loan quotations or loan acceptance to the credit reference agencies and are more likely to make their own loan decisions based on the value of your car than your own specific credit score.