A logbook loan puts your car at risk of being taken away, even if you didn't know about the loan!
Logbook loans have been around for a long time, but as short term loans have become more popular the profile of logbook loan companies seems to have risen.
Like payday loans, logbook loans often come with a high interest rate and financial penalties if you can’t repay.
There is however one significant difference between a logbook loan and a payday loan: if you sign up for a logbook loan, you must use your car as collateral. And even if you’ve not signed up to one of these loans, you could be hit by the consequences.
It’s no longer your car
We often have a lot of money tied up in our cars. It’s an asset that’s very attractive to logbook lenders and they make it as simple as possible for you to use this asset to get a loan.
What most people don’t realise is that once you sign up for a logbook loan, you don’t really own your car anymore.
Logbook loan companies use arcane laws that date back to Victorian times in the wording of their loan agreements. And what most people that sign up to these loans aren’t aware of is that if you break the terms and conditions of the loan, your car can be taken away.
Debt collection process
Most lenders have ways to make you repay money you owe; payday lenders can use continuous payment authorities to get a key to your bank account. Credit card companies and banks use the debt collection process and if this doesn’t work they can resort to court action to enforce repayment of an outstanding debt.
Logbook loan companies don’t need the courts to enforce repayment of logbook loans; they can just take your car from you. They can legally take it and without warning when you don’t repay. They can even use force to enter your property to get the vehicle if it’s parked off road or in a garage.
Once a vehicle is seized it’ll usually be sold at auction. If there’s still money owing on the loan after the car is sold, the lender will resume the debt collection process to chase the borrower.
So not only do you lose your car, you might also be pursued for further money.
It could even happen to you
All this should be concerning to everyone who owns a car. Why? Because these laws mean that if you buy a second-hand car, and the car has an unpaid logbook loan against it, they can take the car from you. Even if you never borrowed any money against it.
Exactly the same laws give logbook loan lenders the right to take a car from the unsuspecting new owner. This is why it’s vitally important to double check for any outstanding finance when purchasing a second hand vehicle. If you don’t you could end up the innocent victim of someone else’s logbook loan problem.
If you’ve got debt problem because of a logbook loan there is a solution. You can find one now by using our free, online Debt Remedy tool.
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