The Loan that Could Cost your Vehicle

A logbook loan is a short term loan and unfortunately you put your vehicle at risk of being taken away, whether you took out a loan or you didn’t.  

For a very long time logbook loans have been using peoples cars as security, and the more popular short term loans have become the faster the profiles of logbook loans have risen.  

Like most short term loans they often come with a high interest rate and a financial penalty if you are unable to keep up with payments.

Some of us may have a lot of money tied up in our vehicles that look very attractive to logbook lenders and it is easy for you to use your asset in order to get a loan.

As soon as you sign up to a logbook loan your vehicle is no longer yours, it is owned by the lender because you have signed ownership over to them.  Citizens Advice are looking into this closely at the moment, as are some regulatory bodies.

Most people who sign up to a logbook loan are very aware that once you have one of these loans and fail to keep up with the terms and conditions, your vehicle is at risk of being repossessed without the lender needing permission.

You will find that most lenders have ways for you to repay money you owe, this could be by using continuous payment authorities to get into your bank account.  

Bill of sale

When you sign yourself up to a logbook loan you will need to sign a bill of sale which will then give the lender permission to repossess your vehicle without needing a court order.  They will not need to give you any sort of notice if you fail to keep up with the repayments. 

Debt collection

Once the vehicle is repossessed it is usually sold at an auction.  If there is still an outstanding balance on the vehicle once it has been sold, the lender will resume the debt collection process and chase the borrower.  So not only will you lose your vehicle you may be required to pay further money.

Do your homework

Even if you haven’t taken out a logbook loan you should be wary when purchasing a second hand vehicle as the law states that if you buy a second hand car and the car is unpaid for by the previous owner, the lender has permission to take the vehicle off you.  This is why it is very important to double check and pay for an outstanding finance check when you are purchasing a second hand vehicle.