5 Things Every Car Owner Must Know About Logbook Loans.

Do you own a car and need fast access to credit? Logbook loans can be a convenient and reliable solution for you. However, before using your vehicle as collateral, it’s important to understand how logbook loans work and what to expect. 

Here's what every Kenyan car owner must know:

1. Your car logbook is the collateral

A logbook loan is a type of secured loan where your car is used as collateral. In Kenya, this financing option allows you to borrow money based on the value of your vehicle while you still use it. 

Banks and microfinance institutions such as Ngao Credit offer logbook loans. The lender keeps the logbook (vehicle ownership document) until you fully repay the loan.

Quick Tip: Ensure your logbook is in your name and your car is fully yours to qualify.

2. You Can Still Drive Your Car

One of the main advantages of logbook loans is that you continue using your vehicle during the repayment period. You do not have to sell your car. Get the cash you need and deal with that medical, school, or business emergency without selling your car.

This makes it an ideal option for people who rely on their vehicles for work, business, or personal use.

3. Loan Amount Depends on the value of your Car

The amount you qualify for depends on your car’s make, model, age, and condition. Most lenders in Kenya offer loans ranging from 50% to 80% of the car’s forced sale value.

Before offering you the loan, the bank or microfinance will need a valuation report showing how much your car is worth.

💡 Pro Tip: Keep your car in good condition and maintain up-to-date records for a higher loan valuation.

4. Interest Rates and Repayment Terms Vary

Logbook loans often come with higher interest rates compared to unsecured loans, due to the quick processing and reduced risk for the lender. Repayment terms can range from a few months up to 24 months, depending on the lender and the loan amount.

Always compare rates from multiple lenders and read the fine print carefully to avoid hidden fees or penalties.

 5. Timely Repayment Is Crucial

If you miss payments, the lender has the legal right to repossess and auction your car to recover the loan amount. To avoid this, ensure you have a solid repayment plan and borrow only what you can comfortably repay.

🚨 Remember: Defaulting on a logbook loan can hurt your credit score and lead to the loss of your vehicle.

Final Thoughts

Logbook loans offer a fast and flexible way for Kenyan car owners to access funds, whether it’s for business expansion, emergencies, or personal use. But like any financial commitment, they come with responsibilities. By understanding how they work and choosing a trusted lender like NCL, you can make smart borrowing decisions that protect both your finances and your vehicle.