It\u2019s a loan that a car\u2019s owner has secured with the value of their car, signing a \u2018bill of sale\u2019 document to give the lender temporary ownership.<\/p>\n\n
The car owner gets a quick and easy loan and<\/strong> can keep driving the car, so it seems like a good choice for someone in a tight spot. But don't be fooled.<\/p>\n\n Until that loan is paid off (which can be anywhere from a few weeks to over a year), the lender keeps the car's logbook and can repossess the car if repayments aren\u2019t met.<\/p>\n\n \u2018Securing\u2019 a loan means giving the lender something that they can use to recover their money if you don\u2019t pay, like with pawning jewellery. <\/p>\n\n High interest rates on these loans can make it tempting for the owner to sell the car even though they legally aren\u2019t allowed to. If you buy a car that has a logbook loan attached to it and the owner doesn\u2019t pay back their loan, the lender can seize your new car without even having to go to court.<\/p>\n\n There have been many calls for the government to make logbook loans illegal but sadly there has been no new legislation yet.<\/p>\n\n Legally, the loan company can seize the car if the loan hasn\u2019t been paid off, unless you agree to pay the remaining loan yourself. This may be a lot because an unpaid loan can gather additional charges.<\/p>\n\n If you find out your car is under a logbook loan, you must tell your insurer. If your car was written off and you claimed on your insurance, the money would go to the lender to repay the loan. <\/p>\n\n Unfortunately, there\u2019s very little you can do. Always ask for ID, documents concerning the loan and contact details if anyone claims to be a collector, so you can follow up the issue with the loans company.<\/p>\n\n You can try taking the person who sold you the car to court but the costs involved may not be worth it. If you\u2019re in this situation, ask Citizens Advice<\/a> for help online or go into your local bureau. They\u2019ll explain your rights and help you decide what to do.<\/p>\n\n The lender is legally obliged to send you a copy of the bill of sale (the document proving their temporary ownership) for the vehicle if you ask, so take that with you if you do get legal advice.<\/p>\n \nHow can I tell if a car is under a logbook loan?<\/h2>\n\n
What happens if a car I\u2019ve bought still has a logbook loan on it?<\/h2>\n\n
What do I do if a lender comes to repossess my car?<\/h2>\n\n