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Enquire Online Today! - 21 Sep 2018

reasons for denied logbook loans

Reasons You Might Be Denied a Logbook Loan


If you’ve recently enquired about a loan against your car but didn’t get approved, you might find yourself wondering why. Although these loans are growing in popularity, not everyone will qualify. Here are some of the primary reasons why people have trouble getting approved for logbook loans.

your credit may be too bad

Bad Credit

Although it’s very true that logbook lenders will work with all kinds of people in all kinds of different situations, there’s no guarantee that you’ll be approved if you have bad credit. These lenders are taking risks, even though you’re securing your loan with your car. If your credit report is too negative, these lenders may turn you down. Following your denial for a loan, make sure you get your annual credit report from all three agencies. You can order them directly from the agencies themselves for around £2 each.

you may not have enough credit score

Not Enough Credit

In many cases, not having enough credit experience is just as bad as having bad credit. It’s often a paradox, too. Lenders won’t give you credit because you don’t have experience, but you can’t get the experience if no one is willing to take a chance. If you’re denied a loan, but you know you don’t have bad credit, then it might have to do with your lack of credit. Remember that all lenders use different approval guidelines, and some are more lenient with credit requirements than others.

You’ve Defaulted on Previous Loans

If you’ve had logbook loans in the past and you’ve defaulted on them, then there’s a chance that you may not qualify for a new loan with the same lender or another lender. Some lenders will pull your credit history, but others will not. If they look at your details, they may see that you failed to repay a previous loan on time and deny you based on the risk alone, regardless of the value of your car.

You Have a Similar Loan with Another Company

If you already have a V5 loan with another company, you cannot be approved for another. That’s because lenders must report their financing to HPI, which is a company that keeps a detailed history about cars in the UK. When you enquire about logbook loans, these lenders will check your VIN through HPI. If they find that you already have a loan, you will be denied.

your car may be low value

Low Car Value

There are many factors that go into determining the value of your car, its condition, the mileage, the make and model, and more. Although no one factor will immediately disqualify you, a combination of them can. For example, if your older car is a low-value make and model with high mileage in rough condition, there’s a good chance that you may not be approved for your loan. Remember that the minimum lending amount is £250, which represents 80% of your car’s value.

No Proof of Employment

Before a logbook lender will make funds available to you, you’ll need to provide proof that you are gainfully employed. This is true even if your car is of significant value. Lending laws in the UK make it illegal for a lender to knowingly take advantage of someone, so they often check your employment to ensure that you have the means to repay your loan. Some will require that you’ve been employed with the same employer for a minimum of three months, but others have different requirements. If you are unemployed, or if you have only been with your employer for a short time, you may not be approved for a loan.

you don't have proof of income

No Proof of Income

Just as lenders will check to ensure that you are employed and you have a steady stream of income, they’ll also need you to verify that income before they’ll provide you with funding. You may be asked to bring copies of bank statements or even stubs from paychecks for the last few months before they can approve you. If your income is too low, or if it is inconsistent, you might not be approved.

Too Much Financing Left on the Car

There are some lenders out there that will work with you if you have a small amount of financing left on your car. For example, if you are approved for a £10,000 loan but you still owe £800 on your car, your lender may simply offer you a loan minus the amount of financing. This way, if lender must take possession of the car and sell it to recoup its losses, it isn’t out any money when the car is paid off. If you have too much financing on your car, though, the lender will not offer you a loan.

you attempt a loan on a motorcycle or van

Trying to Take a Loan on a Van, Boat, Motorcycle, or RV

The clear majority of logbook lenders will only provide loans on cars. If you are trying to get a loan on a van, boat, motorcycle, RV, or commercial vehicle, you will likely be denied. If you are interested in a logbook loan for a company car, this may be possible if you are the registered owner of that car.

Discovering why you were denied the chance to lend can be difficult, but it’s not impossible. The reasons above account for the most common reasons why people in the UK struggle to find lenders who are willing to work with them.Thankfully it's easy to enquire online and discover your eligibility yourself.

Please note: The content provided in our blog posts is for informational purposes only, and does not constitute lending advice, nor does it claim to portray the actual lending experience accurately.