What is a logbook loan
In most cases, when a lender loans money, they secure the money against something you own that they can recover in the event that you fail to pay them the money back that they loaned you. This gives them some security that they can recover their money if you fail to pay the loan back in full and this is why you need a logbook loan check.
Logbook loans generally carry a very high rate of interest and are usually favoured by people with poor credit ratings and those that don’t own a home that the loan can be secured against. In the case of this type of loan the money is set off against the vehicle until the loan is paid in full.
If the borrower doesn’t pay the money back and sells the vehicle to you, the lender can legally come after the vehicle to recover their money.
HPI carry out a logbook loan check to highlight if there is “any” outstanding finance held against the vehicle.
The principals of a logbook loan
Logbook loans differ slightly from normal loans as they carry a very high rate of interest and are usually taken out over a much shorter period of time. Months rather than years, depending on the amount of money borrowed. Interest rates for a logbook loan can be as high as 400% or more so be wary if you are even considering one as they can soon spiral out of control if you miss a payment.
Check the terms and conditions if you are going for a logbook loan and ensure you have a sound financial strategy to pay the money back that you borrow.
In order to secure a logbook loan you will need your vehicle V5C registration document. This is held by the lender until the loan is paid off by the borrower. Depending on which part of the British Isles you live, you may have to sign up to a credit agreement between you and the lender along with a bill of sale. This temporarily transfers ownership of the vehicle to your lender until the loan is paid.
The vehicle you are securing the loan against bust have a current MOT and must be insured. Your car will also be valued by the lender to ensure it offers enough security to recover the amount of money you are borrowing.
With the agreement in place, the money will be transferred to your account and the regular repayments will start. If you fail to make any payments and fall in to arrears the lending company can send the bailiffs around to seize the vehicle. This is where it pays to have done a logbook hpi check, because if you have bought the vehicle in good faith, the lender has every right, and the full support of the courts, to recover the vehicle from you, leaving you out of pocket and without a car.
You could choose to pay off the debt and keep the car, but why would you want to and why should you pay someone else’s debt? an hpi check can take that risk away from as little as £9.99 for a multi check or £19.99 for a single check.
Logbook loan check
All your options for checking whether a logbook loan is still secured against the vehicle you want to buy are shown below in the tables.
HPI offer a comprehensive checking service with a guarantee on the accuracy of their information. It’s really not worth thinking about for such minimal cost you could save yourself not just thousands of pounds but a lot of stress and worry if you were to be unlucky enough to fall victim to an unscrupulous seller.
If you want to understand more about logbook loans and the current law surrounding them, the BBC’s The One Show did a piece on this in February 2017. If you want to watch it, CLICK HERE. To watch it you will need BBC iPlayer and a current TV License.
If you can’t watch the link, in essence the piece on logbook loans says that under current law the buyer is not protected if they unknowingly buy a vehicle with an outstanding logbook loan against it. They will lose their car and the money they paid for it.
However, the Law Commission is proposing changes to the Bill of Sale act to HM Treasury. The current Bill of Sale act was written and in force before cars were even invented and it has not been changed since. The Law Commission is proposing that the changes provide more protection for the buyer if they are unaware of the outstanding loan secured against the car at the time of sale. They will be found to be the innocent party and will keep the car.
The seller will have a legal obligation to declare any outstanding loans secured against the vehicle at the time of sale. If they don’t, this will be considered a criminal act and subject to prosecution.
It’s worth remembering that the above are just proposals that HM Treasury are considering and they are not law yet. Under current law, you will lose the vehicle to the loan company.
So, it’s important that you carry out a thorough check of your car before you buy it. Use HPI Check and carry out a logbook loan check today. It’s all done online and you can be reading a detailed report on the history of the car in a matter of minutes.
Click the links in the tables above of CLICK HERE to be taken to the HPI website.