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Government to Ban Log book loans?
Page last updated Thursday, 21 January 2010
Government to Ban Log book loans?
The concept of this style of loan goes back to Victorian times and the Bills of Sale Act in 1878 and its amendment in 1882, which enables the item on which a loan is secured to be seized and sold if the borrower defaults. What is more the borrower can still be pursued if there is any shortfall when the item is sold.
In modern times this has been translated into a means of borrowing money against a vehicle, a car or a motorbike, resulting in the loss of your vehicle, without a court order, if you default on the repayments to the loan company. In the year ending March 2009 there were nearly 40,000 Logbook loans made, worth £30 million.
More can be found on this method of borrowing money, how it works and its pros and cons at Debtwizard guide to Log Book Loans.
However over the past 4 years more than 1,000 people have complained to the Office of Fair Trading about these loans and the CABx have seen cases where borrowers have been subject to unfair or misleading sales practices.
"Bureaux have seen cases where lenders pursue shortfalls after sale aggressively, including putting people's homes at risk through the use of charging orders - a second chance at securing a previously secured debt," explained David Harked the Bureaux chief executive, saying it was high time such loans were banned.
The government too are saying that Logbook lenders are unfair and charge too much. "They were developed in the days of Charles Dickens and don't meet 21st century consumer standards," said consumer minister Kevin Brennan.
"Complaints relate to the lack of protection available to people if they fall into arrears, unfair collection practices, the complex and confusing nature of the language used in the agreements and the excessively high cost of the loans," said a government spokesman.
Consequently the Department for Business Innovation and Skills (BIS) is carrying out a 12 week consultation on what it calls the "archaic" and expensive method of borrowing, after which the practice is expected to be banned.
Debtwizard Tuesday, 09 March 2010
Paul
It is a criminal offence for someone to sell a vehicle, without the owners consent, when it is on finance. If you do eventually lose the vehicle then after this happens, and not before, you may wish to report the matter to the police, they will in turn approach the Logbook loan company.
Good luck
Debtwizard
paul (Guest) Tuesday, 09 March 2010
Hi I bought a car from ebay which i thought was a good price. 3 weeks later i got a call from a debt collecting agency saying there was outstanding finance on it. this came out to be logbook loans when i asked the debt collecter what this was about he told me it was the 3rd time this person had taken out a loan and sold on a car. and they would be coming to collect. and there is nothing i could do about it because of this loop hole in the law that log book loans uses. I was stupid not to hpi check and have leart the hard way.But what suprises me more is these type of loan sharks are legal 400% apr what a joke most of the borrowers never intend to pay it back because they just dont care.Its not like they can go bankrupt twice is it.Im stupid or just to trusting the hard working honest man suffers again because of the scum. And yes im bitter!!!!!! debt collecters will have to look hard for this one though!
Debtwizard Sunday, 28 February 2010
Harim
Have you contacted Trading Standards as they may be very interested in your case in particular to if the firm you went to is under investigation? They may help you go through the agreement to see if it is fair.
In any event the debt is now unsecured and can be included in any repayment programme such as IVA or DRO or Debt Management Plan.
Also understand your rights as a consumer, see this link http://www.debtwizard.com/debt...guidelines
Best wishes
Mike
harim karim (Guest) Friday, 19 February 2010
hi i took out 850 pounds a log book loan 2 years ago and i couldnt keep up my payment and they took my car of me and sold it and they still want 1900 pound of me thats not fair
