Logbook Loan Debts
If you don’t keep up with repayments on a log book loan, your vehicle can be taken from you and potentially sold at auction. While there is due process the lender must follow, it does not require court action.
Logbook loan providers are becoming a common feature of the high street.
Logbook loans are a way of borrowing money using your car or other vehicle as security. You hand over ownership of the vehicle to the logbook loan company until the loan has been paid back.
Typically people taking out such loans do because they don’t have access to conventional credit. This is normally due to a bad credit rating on account of other debts.
Getting help with logbook loan payments
Always speak to your lender if you’re having difficulties making repayments. Rather than take and dispose of your vehicle at auction, they would rather you eventually repay the loan.
Most logbook loan companies adhere to to a code of practice produced by the Consumer Credit Trade Association (CCTA) and they should:
- Consider reducing your loan payments if your circumstances change.
- Let you hand over the vehicle at any time to settle the debt if you can’t pay it.
- Only repossess your vehicle as a last resort.
- Give you two weeks after repossession to pay off the debt and get your vehicle back.
Can I sell the vehicle?
Any vehicle with a finance agreement, including logbook loans are recorded on the HP Index database which anyone can check before buying. This means if you try to sell a vehicle with an outstanding logbook loan, no dealership will buy it from you.
No. Once a logbook loan has been made the vehicle belongs to the logbook loan company – until the loan agreement has completed and you’ve made all necessary repayments.
As the vehicle is not yours to sell, you’d be breaking the law in doing so. Criminal action may be taken against you.
If you do sell the vehicle, the logbook loan company can repossess it from the new owner – without needing a Court Order.
Logbook loans & IVAs
You can’t include a logbook loan in an IVA as a debt, but you can include repayments as a budgeted item. This means these payments are taken into account before considering how much is left over to repay your unsecured debts.
If the logbook loan payments are completed mid-IVA, you will be expected to make increased payments into the IVA now that your outgoings are lowered.
If the logbook loan agreement is terminated and there is an outstanding amount to be paid; this is known as a shortfall. These debts are unsecured and can be included in an IVA just like any other unsecured debt.[show-iva-cta]
Logbook loans & Bankruptcy
As the debt owed to the logbook loan company is secured on your vehicle, it cannot be taken from you in Bankruptcy.
You must continue to make payments to the logbook loan company otherwise they may repossess the vehicle.
If your payments to the logbook loan company complete before you are discharged from bankruptcy and if at that time the vehicle is worth over £1000, it may be taken from you and sold for the benefit of your creditors whom appear in your bankruptcy.