Log Book Loans - buyers beware

[Littlepeahead]

Now I've been hearing about this today on Radio 4 relating to cars but I guess it could just as easily apply to a bike.

Here's how it works:

Owner 1 takes out a logbook loan on his SV (that he owns in full) in January 2011. Then Owner 1 doesn't pay back all of the loan and interest accrues at 400%.

Owner 2 buys the SV off of Owner 1 in January 2014 after doing an HPI check which shows no outstanding loans.

In March 2014 bailiffs arrive on the doorstep of Owner 2 and demand a large wodge of cash or they are going to repossess the SV. No court order is required and they are quite within their rights to do this. The loan didn't show up on the HPI check as this sort of loan often doesn't and there is no legal requirement for it to be listed on a basic HPI check.

So Owner 2 has no choice but to pay up or hand over the bike.

This would make me very wary of buying a vehicle as a private sale now.

http://www.adviceguide.org.uk/scotla...gbook_loan.htm

[ophic]

doesn't the lender retain the V5 when the vehicle is bought using a logbook loan? hence the name?

I wouldn't buy any vehicle without that!

[Littlepeahead]

I think they get around it under some sort of out dated 'bill of sale' law.

[Red Herring]

Originally Posted by ophic

doesn't the lender retain the V5 when the vehicle is bought using a logbook loan? hence the name?

I wouldn't buy any vehicle without that!

Wouldn't help anyway, owner would just apply for a duplicate saying he has lost the first. The V5 is not proof of ownership, it's just who the vehicle is registered to.

Secondly, and I only have a fleeting knowledge of these things, I'm pretty sure ownership transfers to the lender at the point the loan was taken out but for them to be able to seize your vehicle there has to have been a properly registered "Bill of Sale", or a court order.

Basically if someone turned up on my doorstep trying to seize a vehicle I had bought I would want to see that Bill of Sale and that it had been properly registered. If the paperwork is in order then the person who sold it to you didn't have the right to do so, so it's a fraud, not a civil debt and you can go to the police.

[Red Herring]

Appreciate none of the above helps if you are looking to buy a car or bike. Basically don't buy anything at the side of the road, if you are buying privately go to the sellers house and satisfy yourself that they do live there (vehicle should be registered there) plus the furniture isn't all in crates with "ship to Australia" written all over them.....and if you can't afford to take the loss without your life coming apart buy from a main dealer with all the security that attracts. You get what you pay for in life!

[Bibio]

i think its about time that English law took a leaf out of Scottish law books. for property/possessions to be seized in Scotland there has to be a court order which you can attend and plead your case and only registered Sheriff Officers can carry out said task once the order has been given. another one i would like to see being brought in is 'gazumping' to how its done in Scotland and that is once the offer is accepted then the house belongs to the new owner, no ifs no buts.

personally i think that this kind of loan is bad practise and should be stopped.

[Biker Biggles]

Originally Posted by Bibio

i think its about time that English law took a leaf out of Scottish law books. for property/possessions to be seized in Scotland there has to be a court order which you can attend and plead your case and only registered Sheriff Officers can carry out said task once the order has been given. another one i would like to see being brought in is 'gazumping' to how its done in Scotland and that is once the offer is accepted then the house belongs to the new owner, no ifs no buts.

personally i think that this kind of loan is bad practise and should be stopped.

Totally agree.
Also I think these "loans" secured on assets such as vehicles should be compulsorally registered and checkable as debts or be unenforcable.
That would put a stop to it.

You can however sue the seller of the vehicle for a fraudulent disposal of an asset (not having title to the bike in this case, because he has assigned it to the lender).

Probably won't work in most cases as you'll find they have no money (if they needed the logbook loan in the first place?) but it is probably the only option left open.

Originally Posted by Biker Biggles

Totally agree.
Also I think these "loans" secured on assets such as vehicles should be compulsorally registered and checkable as debts or be unenforcable.
That would put a stop to it.

I think you are right on the money. Seems like it wouldn't be too hard to have someone like the DVLA keep a register of 'interested parties' in a vehicle with a premium rate number to check whether someone has any kind of credit on a vehicle, get rid of all this HPI check non-sense and have an official source, if it isn't on there then it's good to go.

Originally Posted by SvNewbie

I think you are right on the money. Seems like it wouldn't be too hard to have someone like the DVLA keep a register of 'interested parties' in a vehicle with a premium rate number to check whether someone has any kind of credit on a vehicle, get rid of all this HPI check non-sense and have an official source, if it isn't on there then it's good to go.

It would be very easy to enforce too. since the DVLA also keep a register of when it is transferred. If the loan originates before the transfer, and it wasn't registered, then tough doody. You can be sure that the lenders would be really hot on getting it registered.

I've never heard of a log book loan. Seems like a bl00dy stupid idea that these things exist in the first place.