What Is a Logbook Loan?
Learn what a logbook loan is, how using your vehicle as security generally works in Kenya, the risks and costs involved, and what to check before borrowing.
By WeLend · · 2 min read
A logbook loan is a loan secured against a vehicle you already own. Instead of selling your car to raise money, you use it as security for the loan and, in most cases, keep driving it while you repay.
Logbook loans are a common form of secured borrowing in Kenya. This article explains what they are, how they generally work and what you may want to consider before taking one.
What the logbook has to do with it
The logbook is the vehicle's registration document, which records who owns the vehicle. In Kenya, vehicle registration is handled through NTSA. When you take a logbook loan, the lender typically registers an interest in the vehicle, for example by being added as a joint owner, so that the vehicle cannot be sold or transferred without the lender's involvement until the loan is repaid.
How a logbook loan generally works
- You apply with details about yourself, the vehicle and your ability to repay.
- The lender assesses the vehicle, often through a valuation, and reviews your repayment capacity.
- If approved, you agree on the loan amount, cost and repayment schedule.
- The lender's interest is recorded against the vehicle, and the loan is paid out to you.
- You repay in instalments. When the loan is fully cleared, the lender's interest is removed.
Some lenders may also require the vehicle to be insured or fitted with a tracking device during the loan. The exact requirements depend on the lender and the product.
Why people use logbook loans
- To access funds using an asset they already own, without selling it.
- To cover business needs such as stock, equipment or working capital.
- To handle larger personal expenses such as school fees or emergencies.
- Because a secured loan may be available where unsecured options are limited.
Risks and costs to weigh up
Because the loan is secured on your vehicle, the main risk is losing the vehicle if you cannot keep up with repayments. Before borrowing, it helps to be clear on the following:
- The total cost of the loan, including interest and any valuation, processing, insurance or tracking charges.
- What happens if you miss a payment, including any penalties and the steps the lender may take.
- Whether you can repay early, and whether that carries any charge.
- How your instalment fits into your monthly budget alongside your other commitments.
Talking to WeLend
If you are thinking about a logbook loan, you can chat with WeLend on WhatsApp to understand how our logbook loans work, what the costs would be and what you would need to apply. Loan terms depend on the vehicle and your circumstances, so please confirm the specifics with us before making a decision.
This article is general information, not financial advice. Product details, requirements and terms are confirmed directly by WeLend.
