A logbook loan or a bills of sale, you are effectively borrowing money and repaying the debt with interest, like any other credit agreement. However, if you fail to repay the loan then the company could seize your car by way of payment.
The interest rates on logbook loans can be very high and some people have complained about paying 6 times the initial amount borrowed in interest. Once the credit company has agreement that they can take your car as payment, they do not have to go to court to obtain permission, they can simply remove your vehicle.
If you have debt problems with logbook loans you can speak to Debt Support Trust on 0800 085 0226 or submit an email enquiry to contact@debtsupporttrust.org.uk.
V5 Logbook Loans
Your V5 form is your registration information for your car and should be stored safely. You can change the registration details on a V5 form to a new owner and this is what logbook loans companies do if you fail to meet the repayments.
Unlike a credit card or overdraft which are unsecured debts – the repayments are not tied to an asset – a logbook loan is secured against the asset, in this instance, a vehicle. Failure to repay the loan means the company keep the v5 or logbook and remove your car.
The debt level of a logbook loan can rise to high levels, depending on the value of the car and we’ve experienced £12,000 logbook loan debts at Debt Support Trust.
These types of loans are not as regulated as other forms of credit, like payday loans, so there is an increase in the number of people seeking financial support via the v5 loans.
Logbook Loan Problems
One known issue is that some people are borrowing money against their car and then selling the vehicle. Despite having sold the vehicle you are still responsible for repaying the debt. In this instance, people who have bought a vehicle where there has been an outstanding logbook loan remaining, have been left frustrated that their car has been repossessed.
This is just one problem with logbook loans but is a frequent issue which arises with these types of loans in the UK.
If you have a query about a logbook loan problem and need debt advice, then speak to Debt Support Trust on 0800 085 0226 today.