Tuesday 03 July 2012

A growing trend of so called ‘logbook loans’ is worrying debt advisers.

People who borrow money against a car or a motorbike, are at risk of losing their vehicle –  without a court order – if they default on repayments to the loan company. In March 2009 there were nearly 40,000 loans secured against vehicles under ‘bills of sale’ worth £30 million. Borrowers hand over their logbook in exchange for a loan.

Huddersfield debt adviser Jacqui Scott has been shocked by the lack of public awareness of the dangers these loans present: “There is a fundamental lack of protection for consumers. If the borrower falls into arrears there are often extortionate charges and aggressive chasing of shortfalls. Even more worryingly, loans secured on vehicles do not have to be registered so potentially a buyer of a car may be totally unaware that there is a loan secured on it.  Someone who buys a car without knowing it is subject to a bill of sale does not own it  – and so is not protected from having the vehicle repossessed by the creditor.”

Jacqui explains how this situation came about : “The Bill of Sales Act 1878 was amended in 1882. This Act provides that if a loan is secured the security (usually nowadays a car) can be seized and sold if the borrower defaults. The coalition government has put in place a code of practice that bills of sale should be registered –  but this is only a code and is not compulsory. “

She is deeply concerned that vulnerable borrowers in Huddersfield may have no idea of how little protection they have. She urges consumers to read the small print before signing any loan documents: “If you’re not sure about taking out a loan, why not give the Consumer Credit Counselling Service or the Money Advice Service a call? Both offer free advice. Or if you’re already struggling with debt issues, free legal advice under the Legal Help scheme may be available to you.”

For further information, contact Jacqui Scott on 01484 538421 or email jacqui.scott@ridleyandhall.co.uk