This Debt Advice is for Residents of England, Wales and Northern Ireland
Logbook loans are a type of borrowing that is secured against your vehicle or car. The ownership of your vehicle passes on to your logbook loan provider until you have paid your debt.
You can keep using the vehicle but once you haven’t paid your loan, the company can take your vehicle or repossess it. Once repossessed, they’ll sell the vehicle to recover the debt.
The interest rates of logbook loans are extremely expensive amounting to 300% APR or over. This means you’ll pay back more than what you owed.
Logbook loans are an expensive way of borrowing. So, before you consider entering this kind of borrowing, you must weigh your options. If you have been rejected to a logbook loan yet you think this would suit you best, try checking our online debt advice tool and find out whether it’s the best option for you.
How does a logbook loan work?
If you live in England, Wales and Northern Ireland, two separate agreements are in place when entering a logbook loan:
Personal Loan Agreement
A signed agreement that sets out how much you borrow and how repayments are sufficed. This agreement is regulated by the Consumer Credit Act
Bill of Sale
A signed agreement indicating the transfer of ownership to the logbook loan provider or creditor until you’ve fully paid your debt.
Most of the companies will also ask you to give your V5 logbook and other documents concerning your vehicle. Regardless of whether you surrender these documents or not, they have the right to sell your vehicle legally.
In Scotland, logbook loans aren’t common. This is because Bills of Sale are not approved by the Scottish law. This means that logbook loan providers or companies do bot have the same legal rights as compared to the other across the UK.
Arrears on My Logbook Loans
You will be contacted by your creditor once you missed payments on your logbook loan. if you failed to keep the payments up to date, you’ll likely get a default notice. This will give you 14 days to make the requested payments on your arrears.
Once you have not complied, your account will be on default and your creditor can take further action to repossess your vehicle. When you missed payments on your logbook loan, contact us. We’ll help you work on the available options to avoid losing your vehicle.
Repossession and Logbook loan
Once your account is on default, your car is at great risks to be repossessed. Your creditor has to wait for 5 days minimum after the default date to take the vehicle away from you. They no longer need to get court orders to do this considering you signed an agreement with them.
You creditor can tow the vehicle and the costs for removing it is added to your debt. After your vehicle is taken away, it will be auctioned. if the proceeds cannot cover the entire debt, you need to pay the remaining amount. This can be similar to the other non-priority debt where you can offer a certain amount that you can afford.
On the contrary, if the price of the vehicle is more than what you owed, you’ll get the remaining proceeds from it.
Can I get a logbook loan with poor credit?
You still get a logbook loan even with poor credit, but this will depend on the lender. If you’re rejected by other companies and yet you believe that a logbook loan is what you need, contact us so we can assess your situation better.
Logbook Loan on My Car
Logbook loans are registered in the HPI Index a database that can be accessible to anyone who needs to check a vehicle before purchasing it. Also, this database is used by the car dealership to validate the ownership of the vehicle
If you sold the vehicle before paying the logbook loan in full, you’ll be under the following circumstances:
- the logbook loan company can take legal action against you as the seller
- the company can repossess the car from its new owner, without any court order in place
So, if you’re thinking of buying a car from someone else, make sure to check the car and validate its ownership. If you happen to buy one from someone who owes money and secure the debt against the car bought, you can take court action against the person to get your money back.
Help and Advice on Logbook Loan
If you’re currently struggling to manage your resources in paying for your logbook loan, contact us for free debt advice. We have an online debt advice tool that you can use for free. Should you prefer to speak to us, you can call us on 0800 193 1024.