Logbook loans are secured on your vehicle, so the lender owns your vehicle until you pay the loan back. You can keep on using your vehicle as long as you repay the loan. However, logbook loans are expensive and you should avoid them if you can.
Logbook Loans are also known as Car Title Loans or V5 Loans.
If you don’t keep up with repayments on a logbook loan, your vehicle can be taken from you and sold. While there is due process the lender must follow, it does not require court action.
I can’t make my logbook loan repayments
Logbook loan lenders can use bailiffs to seize your vehicle if you don’t meet repayments. Most won’t do so (or won’t sell it) until you have fallen behind with several repayments.
By law, they must send you a default notice first, giving you 14 days to respond. It’s a good idea to get debt advice at this point, to see what your options are. Don’t just ignore the problem.
The logbook loan lender would not need to go to court to repossess your car, assuming the bill of sale has been registered.
Getting help with logbook loan payments
Always speak to your lender if you’re having difficulties making repayments. Rather than take and sell, they would rather you eventually repaid 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 to get the vehicle back.
Can I sell the vehicle?
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 repayments. The vehicle is not yours to sell, so you’ll be breaking the law – it’s theft.
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.
If you do sell the vehicle, the logbook loan company can repossess it from who you ‘sold’ it to – without needing a Court Order
Logbook loans & IVAs
A logbook loan is a priority debt – that means as there are more serious consequences for none payment (losing your vehicle) than for unsecured debt. Therefore these payments are taken into account before considering how much you have to repay your unsecured debts. In other words, the debt is considered to be an essential expenditure and excluded from the IVA and not subject to negotiable repayments.
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 then become unsecured and can be included in an IVA just like any other unsecured debt.
Logbook loans and 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 makes 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 £1500, it may be taken from you and sold for the benefit of the creditors who appear in your bankruptcy.