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Logbook Loan Dos and Don’ts in Kenya
Logbook Loan Dos and Don’ts in Kenya
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Money Management

Logbook Loan Dos and Don’ts in Kenya

Doris Kendi
April 13, 2022

Most people like surprises. But no one likes a surprise bill or expense when they don't have enough money to cover it. 

The good news is, if you’re facing an unwanted ‘surprise’ and aren’t sure how you can pay for it, a logbook loan can save the day! You only need to be eligible and have a car to qualify for a loan. 

A logbook loan lets you borrow a significant amount of money against the value of your car and receive the sum within a few days or, in some cases, in just 24 hours. 

However, as seamless as it sounds, logbook loans do not exactly have the best reputation in the financial services industry. And much of the controversy surrounding these financial products has to do with the level of understanding of the product that borrowers have.  

When taking out a loan, ensure you do so with caution and wisdom. Remember that the loan will eventually need to be paid back, including the interest and other charges. Hence, here are some common dos and don’ts when it comes to logbook loans. 

Also read: 6 Deadly Sins When Taking a Logbook Loan

Logbook Loans Dos

Borrow to Satisfy Pressing Needs and Not Luxuries

You should only consider taking a logbook loan to cover an emergency or to take advantage of quick opportunities such as buying land or an asset with a time limit. You can check out 6 more reasons for taking a logbook loan here

Although a logbook loan doesn’t limit you on what you can use the money for, it is not advisable to take the loan to fund luxuries such as expensive leisure trips or buying designer accessories. Remember that the loan will eventually need to be paid back in full. 

So before you apply for a logbook loan: It is essential to ask yourself the following questions:

  1. What do I need this money for? 
  2. Can the need wait until I save the amount, or do I need the money right now?
  3. What alternatives do I have?
  4. Can I afford to pay back the loan?

Compare the Lenders 

Different logbook lenders have different terms and conditions. So, there is no ‘one fits all’ lender. Therefore, ensure that you take your time to shop around and compare lenders, and then choose one that best suits your needs. 

For example, some lenders are more affordable compared to other lenders. Some lenders charge from as low as 1.6% monthly  interest while others charge an upward of 10% interest per month. 

Also, it’s crucial to check the lender's credibility before you take any loan. There are many online scams who, at the very least, can easily con you of your hard-earned cash with hidden fees. Whichever lender you pick to borrow from, ensure that you thoroughly check their credibility first.

To check out some of the reputable logbook lenders in the country today, visit our logbook loan comparisons page

Check Your Ability to Pay

Before applying for a logbook loan, ensure you have a consistent, sufficient, and reliable income. After all, if you do not pay the loan on time and in full, you risk losing your vehicle.

If you are unsure of how you will pay the money, it is not advisable to go through with the application. Also, do not bank on the probability of a future increase in income. You might end up regretting it. 

Also read: All You Need to Know About Logbook Loans in Kenya. 

Check the Fees and Charges

While the logbook loan processing time is often fast, it might have a lot more fees and charges than a regular unsecured personal or business loan. These charges include:

  • Upfront fees
  • Valuation fees
  • Logbook search + discharge fees
  • Interest rates
  • Car tracker, etc.
  • A requirement to have comprehensive insurance on the vehicle

Ensure that you fully grasp what charges to expect before submitting your application. Note that some lenders will either ask you to pay off your pocket for the upfront fees or add the fees to the loan amount and charge you interest on the fees too now that the fees were also lent to you. It is important to understand what model saves you money. 

Familiarise Yourself With the Other Terms and Conditions

Logbook loans have similar general terms and conditions - proof of your car ownership, upfront vehicle valuation to determine the value, comprehensive insurance cover, etc. However, various minor details vary from lender to lender. For example, some lenders charge legal fees, CRB charges, application fees etc. 

In addition, no two logbook loan agreements are the same. Every lender has unique terms and conditions of repayments in its legal loan agreement. 

Hence, ensure that you completely understand the terms and conditions in your lender’s loan agreement before you sign on the dotted line. 

Also read: Predatory Lending in Kenya: Don’t Be a Victim

Logbook Loans Don'ts

1. Don’t Borrow More Than You Can’t Comfortably Repay

If you are unsure of how you will pay back the logbook loan within a reasonable schedule, it may be best that you do not take out the loan. Alternatively, borrow only an amount you are sure you will comfortably pay back with your current income. 

Discuss with the lender how payments work, and always keep your monthly budget in mind before taking out a loan of any kind.

2. Don’t Borrow More Than You Need

It can be very tempting to borrow a little bit more than the need at hand, especially once you learn how much more you can qualify for. Let's say you need about Ksh200,000 to top up for a quick investment that you urgently need to make, but your car value is a lot more than that, and you qualify Ksh500,000. You might be tempted to apply for Ksh.100,000 or so more to help sort out a few bills for the following month. 

As tempting as it is, don’t do it. Remember this is not free money and will need to be paid back - with interest and other charges. 

Also read: Haste Makes Waste: Why Hasty Financial Decisions Lead to Regrets.

3. Don’t Borrow Because They Offered

Lately, logbook loan lenders are sprouting up everywhere, and great offers are popping out everywhere - even on the streets as you drive. But don’t just take out a loan because someone offered. 

Again, it is not free money. The loan needs to be paid back and, in addition, might cost you a fortune in interest and other charges. 

4. Don’t Pay Late or Skip Payments.

Although some lenders will skip credit checks, there are consequences should you choose not to pay back your loan or make timely payments. At the very least, you could accumulate a lot of charges in interest and penalties, and at the worst, you could lose your vehicle. 

If you suspect you are not able to pay your next instalment, call the lender immediately to let them know and see if they can work something out for you. Lenders love it when their clients are communicative instead of going into hiding - and oftentimes, credible logbook loan lenders may be willing to renegotiate your repayment terms to give you a chance not to go into default. 


Logbook loans can be great. They can save you in a dire situation without too much hustle. However, just like any other type of loan, you need to know all the information at hand before you sign the agreement.

In addition, ensure you practice good financial habits when applying for a logbook loan. This will make sure that you take a loan to cover a valid need and also, that you pay back the loan successfully. 

If you are looking into getting a logbook loan. Visit our logbook loan comparisons page to view some of the available options in Kenya today. 

Doris is a finance professional, freelance writer and SEO expert. She has experience helping businesses of all sizes create content that helps improve their site quality and increase their online traffic. She is a personal finance and wealth creation enthusiast and a frequent contributor to Money254. Visit Doris' personal website to learn more about her work.

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