Innocent drivers at risk of losing cars to logbook lenders

[Michael Browne]

Citizens Advice warns that without a change in the law, more and more innocent second-hand car buyers could have their vehicle taken from them because of an outstanding logbook loan from the previous owner.

 

 

New research with 874 used car buyers, released by the national charity today, finds:

 

• 63% of used car buyers did not check if the car they were buying had an outstanding loan attached;
  
• 2 in 5 drivers have never heard of a log book loan;
  
• 44% did not know they could have their car taken away by a log book lender, even if they are not the original borrower.
  

Logbook loans, officially called bills of sale, are often taken out against a car. If a borrower fails to repay the loan, the car can be seized by the lender. But if the car is sold on while the loan is still outstanding and payments are not being made the logbook lender is legally entitled to take away the vehicle from the new owner.

 

 

Evidence from Citizens Advice, released earlier this year, found one in five people who reported a problem to Citizens Advice about logbook loans had had their car repossessed despite not being the original borrower.

 

 

Analysis from the charity also found the number of logbook loans taken out this year could reach 60,000; a rise of 61% on 2011. An increase in loans means an increase in risk for used car buyers.

 

 

 

One man came to Citizens Advice after he had spent £1,100 on a second-hand car but a few weeks later he received a letter from a logbook loans company saying he owed £637. Despite contacting the loan firm to explain the car had be sold to him and providing the loan firm with the seller’s address, someone still turned up to take the car away. Worried he would lose his car and not have a way to get to work, he borrowed money in order to pay off the other person’s loan.

 

 

 

Drivers can carry out checks to see if there is a loan attached to a car before they buy it. But not all loans will show up and often there is a cost for searches to look for loans.

Citizens Advice wants the law to be changed so that logbook lenders cannot repossess someone’s car if they are not the original borrower. People who take out logbook loans also need better protections to make lenders treat them fairly.

 

 

http://www.citizensadvice.org.uk/index/pressoffice/press_index/press_210140623.htm

[Tryst]

Anyone who has put their car up as collateral against a loan is committing fraud by selling the car before the loan is paid off.

 

Until the loan is paid, the car belongs to the lenders so you are effectively selling someone else's car.

 

Since Fraud is a criminal offence and can carry a prison sentence,

the borrower is in the brown stuff up to their necks, it's no longer a civil case

and the lender can go after the borrower to get their money back far more easily

as the court will issue a repayment plan as a compensation order within the fraud case.

 

Taking the car from the person it was sold to is petty under the circumstances.

 

their borrower face prison and still has to repay the loan as compensation by order of a court, that means they face more time inside if they don't pay.

 

I think the main problem is that logbook lenders, just like payday lenders,

charge extortionate interest rates that many courts would disagree with.

 

Therefore the compensation they get is nowhere near what they would like to charge.

[tracym70]

This happened to Me.

 

The loan did not show up in the hpi check as it had only been taken out a few days before I unwittingly purchased the vehicle.

 

I was given the log book which us unusual as the loan company usually takes it, this may have been a copy.

 

They came and took my car which as a single working parent I relied on.

 

I had no savings to pay off the other debt or to purchase another vehicle so tough luck to me.

 

The seller has offered me a tenner a week for the next 3 years

and apparently if I take him to court will make sure I get less than that as he will tell nthem he has less disposable income.

 

Not a thing I can do about it, they told me they scrap the cars!

 

How can this be fair on innocent people?

 

The law needs to help us

[Codfather]

Anyone who has put their car up as collateral against a loan is committing fraud by selling the car before the loan is paid off. Until the loan is paid, the car belongs to the lenders so you are effectively selling someone else's car. Since Fraud is a criminal offence and can carry a prison sentence, the borrower is in the brown stuff up to their necks, it's no longer a civil case and the lender can go after the borrower to get their money back far more easily as the court will issue a repayment plan as a compensation order within the fraud case. Taking the car from the person it was sold to is petty under the circumstances. their borrower face prison and still has to repay the loan as compensation by order of a court, that means they face more time inside if they don't pay.

 

I think the main problem is that logbook lenders, just like payday lenders, charge extortionate interest rates that many courts would disagree with. Therefore the compensation they get is nowhere near what they would like to charge.

 

Compensation, awarded by a Court in a criminal case, takes into account a criminal's perceived ability to pay. If you are lucky to get an award, it may well be less than what is owed.

 

When I worked for the DWP, they always reclaimed compensation in fraud convictions through the Civil Courts which did not take this into account. There are pitfalls though where the debtor could play certain tricks to withold payment but the DWP did have one more trick up their sleeve where they would set the debt against any future benefits!

[theoldrouge]

You should bear in mind, that at the moment logbook loan companies are, at the moment only operating on interim authorisation from the FCA. Any problems with these companies should be reported to the FCA, as all have been warned to raise standards if they are to receive full authorisation

[mally1975]

Please count me in on this thread.

 

I've had to fight tooth and nail to keep my car as an ex took out one of these loans on MY car.

 

I'd paid for in full for my car and never defaulted and the car has always been in my name..

 

Going to court to prove custody of a car is just ridiculous - trust me lol.

 

. I won but it's been a serious battle to keep the car I've owned since new.

 

The first I knew about the loan was when I happened to want to test drive a newer car.

 

The salesman asked me if I wanted to do a part-exchange and although I said no thank you

- he must've have done the HPI check and found this loan for about £3k on a car that was definitely not worth that much!..

 

A log book loan company I know the name of but never used, needed or wanted to..

 

Another embarrassing factor, I got refused a test drive on the newer car 'just in case' - of what I'm still not sure of.

 

. What I would like to know is what's to stop any member of the public using my registration and faking a log book,

taking out a loan on my car and then them coming to collect it when 'I' don't pay..

 

The system seems to be too open to fraud especially with the 'assistance' of cameras and ANPR.

 

. What is out there to protect the innocent from rogues?..

[sequenci]

You may be able to argue that you have good title to the car if it was purchased honestly without prior knowledge of finance on the vehicle.

[tracym70]

Sadly they don't give you the benefit of time. From receiving my first letter from the loan company to my car being taken away was 12 days because I wasn't willing nor able to clear the debt owed on the car.

[sequenci]

Sadly they don't give you the benefit of time. From receiving my first letter from the loan company to my car being taken away was 12 days because I wasn't willing nor able to clear the debt owed on the car.

 

That's unlawful.

 

They need to give you 14 days - and only once a default notice has been served. Prior to that they need to serve an arrears notice.

[frickshan]

Please count me in on this thread. I've had to fight tooth and nail to keep my car ..............registration and faking a log book, taking out a loan on my car and then them coming to collect it when 'I' don't pay.. The system seems to be too open to fraud especially with the 'assistance' of cameras and ANPR.. What is out there to protect the innocent from rogues?..

What is out there to protect the innocent from rogues?

Hi Mally

Nothing,.........

 

..... in my experience, my post from 2008 http://www.consumeractiongroup.co.uk/forum/showthread.php?169820-False-Claim-to-Title-!

 

Still rankles with me,

I suspect a stolen V5 was used to defraud LBL (there were issues with "disappeared" log books (V5) at the DVLA around that time.

 

My last communication regarding it was months later.

 

from my local trading standards office wanting permission to pass on the details to another T.S. branch local to LBL.

 

These companies don't even have the morals of a sewer rat,

they want their money irrespective of the manner used to obtain it,

the authorities & associates that should oversee their behaviour don't care either.

 

I'd have taken great delight in getting to the cause of all the grief they dumped on me but without the assistance & interest of public bodies I was hamstrung.

[tracym70]

I would assume the 14 days notice would have been sent to to borrower and not to me.

 

Taking the car is the final part in the system of what they do.

 

By the time it gets to that point all warnings and notices have been sent to original owner

and by the time i was notified of anything happening it was all too late yo be solved

unless I could pay the debt and all charges in full

[theoldrouge]

Sadly they don't give you the benefit of time. From receiving my first letter from the loan company to my car being taken away was 12 days because I wasn't willing nor able to clear the debt owed on the car.

 

Was the Logbbook Loan Co a member of the CCTA?

 

If so read section 5 of their code of practice-

 

http://www.ccta.co.uk/admindocs/codes_of_practice/bill_of_sale_code_non_member_update_aug_2013.pdf

[theoldrouge]

Hi Mally

Nothing,.............. in my experience, my post from 2008 http://www.consumeractiongroup.co.uk/forum/showthread.php?169820-False-Claim-to-Title-!

Still rankles with me, I suspect a stolen V5 was used to defraud LBL (there were issues with "disappeared" log books (V5) at the DVLA around that time.

My last communication regarding it was months later. from my local trading standards office wanting permission to pass on the details to another T.S. branch local to LBL.

These companies don't even have the morals of a sewer rat, they want their money irrespective of the manner used to obtain it, the authorities & associates that should oversee their behaviour don't care either.

I'd have taken great delight in getting to the cause of all the grief they dumped on me but without the assistance & interest of public bodies I was hamstrung.

 

times are changing on these companies, make full reports on all problems with them to the FCA-

 

http://www.fca.org.uk/firms/firm-types/consumer-credit/consumer-credit-research/logbook-loans

[mally1975]

Hi Mally

Nothing,.............. in my experience, my post from 2008 http://www.consumeractiongroup.co.uk/forum/showthread.php?169820-False-Claim-to-Title-!

Still rankles with me, I suspect a stolen V5 was used to defraud LBL (there were issues with "disappeared" log books (V5) at the DVLA around that time.

My last communication regarding it was months later. from my local trading standards office wanting permission to pass on the details to another T.S. branch local to LBL.

These companies don't even have the morals of a sewer rat, they want their money irrespective of the manner used to obtain it, the authorities & associates that should oversee their behaviour don't care either.

I'd have taken great delight in getting to the cause of all the grief they dumped on me but without the assistance & interest of public bodies I was hamstrung.

 

Hey Frickshan,

 

Read your earlier post - that's disguting treatment of you, my heart goes out to you .

 

. You're right, fighting for your car is extremely frustrating

- I was very lucky and had a good solicitor (I shouted back too loudly which is why I think they gave it up!.. Admin error my bum!!!)

but it really shouldn't come to this..

 

I do appreciate by law, they 'own' my car but how when I as the supposed lawful owner did not and would not be taking out a loan on my car.

 

Suggestion

1: Chase the person who owes the debt, surely if they can find me they can find them? Or

2: Ask the person who sold the car to me for the money owed for the car which they now have in their

bank account /pocket / matress / wherever they keep their loot lol.

 

. Take care, Mally

[frickshan]

Hey Frickshan,

 

Read your earlier post - that's disguting treatment of you, my heart goes out to you .

 

. You're right, fighting for your car is extremely frustrating

- I was very lucky and had a good solicitor (I shouted back too loudly which is why I think they gave it up!.. Admin error my bum!!!)

but it really shouldn't come to this..

 

I do appreciate by law, they 'own' my car but how when I as the supposed lawful owner did not and would not be taking out a loan on my car.

 

Suggestion

1: Chase the person who owes the debt, surely if they can find me they can find them? Or

2: Ask the person who sold the car to me for the money owed for the car which they now have in their

bank account /pocket / matress / wherever they keep their loot lol.

 

. Take care, Mally

I don't understand how it works, surely they must have to see & keep evidence of ownership of the vehicle? I thought they keep the V5 in P.x for the loan?

That's what sent them scuttling for the drains in my case, proof of my uninterrupted ownership. I imagined they had a different fraudulent version in their hands, giving them what they thought was proof of ownership.

Sadly I'll never know.