Beware Of Log Book Loans

Monday, 18. July 2011

Hi, Graham Hill here, thank you so much for visiting my blog, I hope you learn a lot and as a result end up driving a great car. In order to do so you can get all the information you need by buying my book, An Insider Guide To Car Finance or use me to finance your next car. Happy driving.

Have you heard of log book loans? Do you know what they are? As more people find themselves out of work and desperate to raise some cash to pay bills or attend interviews they are looking at some of these grey areas of raising cash. There are of course the loan sharks that everyone should avoid but there is one area that seems to have an air of legitimacy and that is what is known as Log Book Loans or loans secured against a vehicle that you own. If you had taken out the loan secured against the car when you purchased it you would have entered into a Hire Purchase or Conditional Sale Agreement.

However, if you already own the vehicle and are seeking to raise money against it this can be done quite legally under a Bill of Sale. The lender agrees not to take possession of the car provided you make your payments per the terms of the agreement.

However, you are not afforded the protection of the Consumer Credit Act which means that should the borrower default the lender can repossess the vehicle without a court order. When the original Bill of Sale Act became law in 1854 there was more protection given to the lender than the borrower.

This situation has been completely reversed in the 21st century but the old law still stands and, in the opinion of many, in need of urgent reform.

Some of the more shady lenders have taken the spirit of this old Act to extremes with provisions in the contract to use force to recover the property and even break windows to gain entry to property where the vehicle may be housed.

Can you believe it that there is a law that allows a lender to send round a thug of dubious background with a baseball bat to relieve you of your car keys? The labour Government had intended outlawing this type of lending altogether but the Coalition has given the industry time to create a self regulated code of practice.

Isn’t that what was originally done to control clampers – that’ll work then eh! Unfortunately with little help from the banks not only are private individuals turning to this short term fix type loan, leaving themselves vulnerable, but also small businesses are hocking their cars and vans to inject quick cash into the business, often at high rates of interest.

In fact 18% of all Bill of Sale loans last year were to small businesses so maybe the Coalition should be coming up with alternatives to this type of loan than allowing it to continue with an unenforceable code of practice. My advice to any individual having difficulties is to join a credit union as soon as you can, put a little aside and you’ll be surprised how helpful they can be in times of emergency. Have you been caught out with a log book loan? By Graham Hill

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One Response to “Beware Of Log Book Loans”



  1. Jeffrey Says:

    logbook is a document or paperwork which contains important information about the vehicle such as owner details, registration number, chassis number, model number, color, etc. So, once you keep it as collateral with lender, the car legally becomes the property of loan provide

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