WIREDGOV

Aggressive behaviour, sexual harassment and death threats are just some of the brutish tactics logbook lenders used to intimidate customers, reveals new evidence from Citizens Advice.

The charity exposes the murky world of logbook loans as it finds borrowers face high interest rates, ridiculous charging structures and bamboozling language. Citizens Advice analysed 261 client cases about logbook loans which were reported between February 2011 and January 2014. New voluntary practices for the industry were introduced in 2011 but Citizens Advice evidence suggests this code of conduct is being flouted.

One in five people had had their car repossessed despite not being the original borrower. As it stands, cars sold with a logbook loan against them can be repossessed by the lender even though the new owner did not take out the loan.  The car had been sold with the loan still attached to it and the new owner was completely unaware as the loans don’t have to be registered.

Citizens Advice wants this practice to be reversed and is calling on the Financial Conduct Authority and Government to require lenders to get a court order before they can take away someone’s car and to stop repossessions of cars that have been sold on with loans.

Logbook loans, or ‘bills of sale’ as they are known officially, are often taken out by people who find it difficult to get credit elsewhere as they’re able to secure the loan against their car.  If the borrower struggles to keep up with repayments the car is taken away without any official process.

The analysis found the average loan was £1,286 but some people had borrowed as much as £19,000 and people have paid up to eight times the original loan by the time they got help from Citizens Advice.

Click here for full press release