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Logbook Loan in Kenya: A complete Guide When Your Spouse Acts As The Payer or Guarantor

Logbook Loan in Kenya: A complete Guide When Your Spouse Acts As The Payer or Guarantor

Logbook loans are a popular way for vehicle owners in Kenya to access quick cash by using their car’s logbook as collateral. If you need a loan but your spouse is willing to pay on your behalf, you may be wondering about the process, legal implications, and potential risks.

This guide will walk you through everything you need to know, including eligibility, documentation, loan structure, repayment process, and risks when taking a logbook loan with a spouse acting as the payer.

1. Understanding Logbook Loans in Kenya

A logbook loan is a secured loan where you use your vehicle as collateral. The lender temporarily registers a lien on your logbook, meaning they have a legal claim on your car until you fully repay the loan.

✔ You continue using your car during the loan period.
✔ The loan amount is based on your car’s value (usually 50-80% of the car’s market value).
✔ Interest rates range between 2.5% - 10% per month, depending on the lender.
✔ Repayment periods vary from 3 months to 36 months.

🔹 Pro Tip: Always compare different lenders before choosing one. Some have hidden fees and high penalties for late repayment.

2. Who Takes the Loan? You or Your Spouse?

Since a logbook loan is secured against the car, the loan is usually taken in the name of the vehicle owner (the person whose name is on the logbook). However, if your spouse is willing to pay on your behalf, there are two ways to structure the loan:

Option 1: You Take the Loan, Spouse Pays as a Guarantor

  • The loan is issued in your name since the vehicle logbook is under your name.
  • Your spouse signs as a guarantor and commits to making payments.
  • In case of default, the lender can still repossess the car or demand repayment from both of you.

✅ Best if: You want to maintain ownership of the vehicle but need financial support from your spouse.

Option 2: You Transfer Logbook Ownership to Your Spouse, and They Take the Loan

  • The logbook is transferred partially or fully to your spouse.
  • Your spouse applies for the loan in their name as the official vehicle owner.
  • Once the loan is repaid, the logbook remains in their name unless they transfer it back.

✅ Best if: Your spouse has a better credit history, higher income, or a stable financial record, increasing the chances of getting a better loan offer.

🔹 Pro Tip: Some lenders allow joint ownership, meaning both names appear on the logbook. This can be a good middle-ground option.

3. Key Documents Required When Spouse Pays on Your Behalf

Regardless of how you structure the loan, these documents are generally required:

For You (Vehicle Owner & Borrower):

✔ Original logbook (showing ownership of the vehicle).
✔ National ID & KRA PIN.
✔ 6-month bank statements or proof of income.
✔ Vehicle valuation report (done by the lender or an approved valuer).

For Your Spouse (Paying Party or Guarantor):

✔ National ID & KRA PIN.
✔ Payslips or Business Records (to prove ability to pay).
✔ Consent Letter (some lenders require a signed agreement confirming they will pay on your behalf).

🔹 Pro Tip: If your spouse is the primary payer, ensure they have a strong financial profile to increase approval chances.

4. How Repayments Work When Your Spouse Pays the Loan

Once the loan is approved, repayment starts immediately, and your spouse will be responsible for payments. The repayment can be structured in different ways:

Option 1: Direct Payment from Your Spouse to the Lender

  • Your spouse makes payments directly to the lender’s bank account, mobile money, or cheque.
  • This is the most secure method as payments go straight to the loan account.

Option 2: You Receive the Money and Pay the Lender

  • The lender disburses the loan to your account, and you forward payments to them.
  • This method requires high trust between both of you.

Option 3: Joint Account for Loan Repayment

  • You open a joint bank or mobile money account with your spouse.
  • The loan repayments automatically deduct from this account.
  • Helps avoid confusion and missed payments.

🔹 Pro Tip: Set up automatic payments to avoid penalties for late repayment.

While having your spouse pay on your behalf is helpful, there are some risks involved:

A. What Happens If Your Spouse Fails to Pay?

  • If the loan is in your name, you remain fully liable, even if your spouse agreed to pay.
  • If they stop making payments, the lender can repossess your vehicle.

B. What Happens If You Separate or Divorce?

  • If the loan is in your name, you may be forced to repay it alone if your spouse refuses.
  • If the loan is in your spouse’s name, they may claim full ownership of the car after repayment.

C. Can a Lender Refuse to Accept Spouse’s Payments?

  • Most lenders don’t care who pays as long as payments are made on time.
  • However, the official loan agreement is only between you and the lender.

🔹 Pro Tip: Have a written agreement with your spouse outlining who pays what amount and what happens in case of financial issues.

6. Choosing the Right Logbook Loan Lender

Not all logbook loan providers in Kenya allow third-party payments by a spouse. When selecting a lender, consider:

✅ Flexible Repayment Terms – Choose a lender who allows spouse payments without restrictions.
✅ Low Interest Rates – Compare multiple lenders to get the best deal.
✅ Fast Approval & Disbursement – Some lenders take 24 hours, while others take a week.
✅ Transparent Fees – Avoid lenders with hidden charges or excessive penalties.
✅ Reputation & Reviews – Read customer reviews before selecting a provider.

🔹 Pro Tip: Work with a trusted loan broker like Kifedha to compare different logbook loan providers and get the best offer.

7. Final Thoughts: Is It a Good Idea for Your Spouse to Pay the Loan?

Having your spouse pay your logbook loan can be a great way to manage financial difficulties if both of you agree and trust each other. However, it’s important to:

✔ Choose the right loan structure – Either you take the loan, or they do.
✔ Sign a written agreement – Avoid future disputes.
✔ Ensure stable repayment ability – To prevent repossession of your vehicle.
✔ Choose a reliable lender – One that allows flexible repayment options.

By understanding the process, risks, and legal aspects, you can successfully take a logbook loan while your spouse pays on your behalf without future complications.

💡 Need help finding a logbook loan with flexible repayment options? Contact Kifedha 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 opportunities.

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