Buying a Used Car in Kenya? 6 Mistakes to Avoid If a Logbook Loan Is Involved

Why Hidden Logbook Loans Are a Serious Risk

Kenya’s used car market is fast-moving, but with that speed comes danger—especially if a seller fails to disclose a logbook loan tied to the car. If you unknowingly buy such a vehicle, the lender can legally repossess the car, even if you’ve paid in full.

This article outlines 6 key mistakes to avoid if you suspect a car has a hidden loan, and includes a Used Car Buyer Checklist and Sale Agreement Template to help you avoid being scammed.

1. Don’t Pay Before Verifying the Logbook’s Status

Logbook loans are registered with NTSA. Even if the logbook looks genuine, it may have a registered encumbrance.

What to do:
Conduct a logbook search on the NTSA portal before parting with any money.

2. Don’t Trust a Transfer Done Only on Paper

If NTSA hasn’t approved the transfer, the loan remains—and the lender can block or reverse it.

What to do:
Only pay once NTSA confirms that the logbook is clean and in your name.

3. Don’t Ignore Seller Red Flags

Rushing you, claiming “it’s in someone else’s name,” or giving a photocopy of the logbook are all warning signs.

What to do:
Always insist on original documents and verify the seller’s identity.

4. Don’t Accept Verbal Promises About Loan Clearance

Unless the lender officially removes the lien, the car is still legally theirs.

What to do:
Request a written clearance letter and confirm lien removal with NTSA.

5. Don’t Proceed Without a Signed Sales Agreement

Without a written agreement, you have no legal recourse if the car is repossessed.

What to do:
Use a formal Vehicle Sale Agreement—template provided below.

6. Don’t Wait to “Fix It Later”

If repossession happens, it will be swift. You’ll lose both the car and your money.

What to do:
Contact the lender or a lawyer immediately if you suspect the car is encumbered.

Used Car Buyer Checklist (Kenya – 2025 Edition)

Before you pay, confirm that you’ve done the following:

Vehicle Verification:

• Cross-check chassis, engine, and registration numbers
• Confirm logbook matches seller’s ID
• Check service records and ownership history

NTSA & Legal Checks:

• Run an NTSA logbook search
• Confirm no existing logbook loan or lien
• Verify that the car is not blacklisted, stolen, or under police watch

Seller Verification:

• Confirm seller is the legal owner
• Match ID and KRA PIN with logbook
• Request seller’s contact details and physical location

Documentation:

• Get a signed Vehicle Sale Agreement
• Attach copies of ID, logbook, and payment receipts
• If buying from a dealer, ask for a business license and VAT invoice

Vehicle Sale Agreement Template with Encumbrance Clauses

Use this sample template to protect yourself when buying a car in Kenya:

Vehicle Sale Agreement

This Agreement is made on [Date] between:

Seller:
Full Name: [Full Name]
ID Number: [ID No.]
KRA PIN: [PIN]
Phone: [Phone]

Buyer:
Full Name: [Full Name]
ID Number: [ID No.]
KRA PIN: [PIN]
Phone: [Phone]

Vehicle Details:
Make & Model: [Make and Model]
Registration Number: [KDK 123X]
Chassis Number: [XYZ123456]
Engine Number: [ABC123456]
Year of Manufacture: [Year]
Logbook Number: [XXXXXXX]

Terms and Conditions:

1. Purchase Price: The agreed price is KES [Amount], paid via [M-Pesa/Bank Transfer/Cash].
2. Declaration of Ownership:
   The Seller affirms that they are the lawful owner of the vehicle and that it is free from any liens, logbook loans, encumbrances, or claims.
3. Condition Disclosure:
   The Buyer has inspected the vehicle and accepts it as-is, unless otherwise agreed in writing.
4. Transfer and Documentation:
   The Seller agrees to initiate and support logbook transfer to the Buyer within 7 working days of this agreement.
5. Loan Recovery Clause:
   If any hidden encumbrance or logbook loan is discovered after sale, the Seller agrees to fully refund the Buyer or clear the loan within 5 working days.
6. Dispute Resolution:
   Any dispute will be settled under Kenyan law through arbitration or civil court.

Signed:

Seller Signature & Date

Buyer Signature & Date

Final Word: Don’t Be the Victim of a Hidden Loan

Hidden logbook loans are one of the most common causes of financial loss for used car buyers in Kenya. But with the right knowledge—and documents—you can confidently protect yourself.

Resources:

• NTSA Logbook Search Portal
• Ardhisasa for property and asset checks
• Request a downloadable PDF version of the checklist and agreement by leaving a comment below or subscribing to updates.

Remember!

Don’t let cash stop you from getting the car you want — new or secondhand.
Whether you’re buying from a dealer or the secondhand market, we offer flexible financing to help you own it with confidence — minus the logbook loan drama.

Contact us through our contact form, call us on +254791573231 or visit one of our branches  across Nairobi, Kiambu, Machakos, and Kajiado counties to explore your financial options.