For many Kenyans, a vehicle is one of the most valuable assets they own. When an urgent need arises — school fees, a medical bill, stock for a business or an unexpected opportunity — that vehicle can become a source of funding through a logbook loan. Used wisely, logbook loans provide fast access to credit without selling the car. Used carelessly, they can become expensive. This guide explains how they work and how to borrow responsibly.
What is a logbook loan?
A logbook loan is a loan secured against a vehicle that you own. The lender registers a security interest over the vehicle, and you continue to use it while you repay the loan. Once the loan is repaid in full, the security interest is discharged and full ownership remains with you.
In Kenya, security over movable assets such as vehicles is governed by the Movable Property Security Rights Act, 2017, which provides for registration of security interests at the Collateral Registry. This framework gives lenders confidence and allows borrowers to access credit using assets they already own.
Who can get a logbook loan?
- Individuals who own a vehicle registered in their name.
- Businesses that own commercial vehicles, vans, trucks or public service vehicles.
- Borrowers who can demonstrate an income or business cash flow sufficient to repay.
Lenders typically require the original logbook, a valid comprehensive insurance policy, identification documents, a KRA PIN and evidence of income such as bank statements or payslips.
How much can you borrow?
The amount depends mainly on two factors:
- The value of the vehicle. The lender will arrange a valuation, considering make, model, year, mileage, condition and market demand. Loans are usually limited to a percentage of the assessed value to allow a safety margin.
- Your ability to repay. A responsible lender will not lend simply because the vehicle is valuable. Your income and existing obligations determine how much you can comfortably repay each month.
Understanding the true cost
Logbook loans can carry higher interest rates than long-term secured loans because they are often short-term and processed quickly. In addition to interest, there may be charges for valuation, registration of the security interest, tracking devices and insurance. Before you sign, ask for:
- The interest rate and whether it is calculated on a reducing balance or a flat basis.
- All fees and charges, listed individually.
- The total amount you will repay over the life of the loan.
- Penalties for late payment and any terms for early repayment.
A reputable lender will provide these details in writing. Use our loan calculator to estimate monthly instalments before you apply.
A logbook loan should solve a problem, not create a new one. Borrow for a clear purpose, and know exactly how you will repay.
Good reasons to take a logbook loan
- Business working capital to buy stock for a confirmed order or season.
- Urgent obligations such as school fees or medical costs when other options are limited.
- Bridging finance while waiting for a confirmed payment.
- Consolidating more expensive debt into a single, structured facility.
Situations to be cautious about
- Borrowing to fund ongoing household spending without a plan to increase income.
- Taking multiple short-term loans to repay one another.
- Borrowing against a vehicle you depend on to earn income if repayments would be a stretch.
- Signing agreements you have not read or fully understood.
What happens if you cannot repay?
If you miss repayments, the lender may charge penalties and, ultimately, may be entitled to enforce its security, which can include repossessing and selling the vehicle in accordance with the law and the loan agreement. Repossession is costly and distressing for everyone. The best approach is to contact your lender early, explain your situation and agree on a workable solution — such as a restructured repayment plan — before arrears build up.
Tips for a smooth logbook loan
- Ensure the vehicle's logbook is in your name and that there are no existing encumbrances.
- Keep comprehensive insurance active throughout the loan.
- Maintain the vehicle in good condition; its value protects both you and the lender.
- Set up automatic repayments aligned with your payday or business cash cycle.
- Keep records of all payments and request statements regularly.
- Once fully repaid, confirm that the security interest has been discharged.
Logbook loans versus vehicle finance
A logbook loan uses a vehicle you already own to raise funds for another purpose. Vehicle finance, by contrast, helps you purchase a vehicle and is secured on the vehicle being bought. If your goal is to acquire a new car or truck, vehicle finance is usually the more appropriate and cost-effective route.
Choosing a responsible lender
Look for a lender that explains every cost clearly, assesses affordability properly, registers its security transparently and treats borrowers with respect. Avoid lenders that pressure you to sign quickly, refuse to provide written terms or encourage you to borrow more than you need.
Borrow with SilverHouse Credit
SilverHouse Credit offers logbook loans for individuals and businesses with transparent pricing, careful affordability checks and respectful service. You keep driving your vehicle while you repay. Apply online or call us to speak with a relationship manager.
