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Innocent drivers at risk of losing cars to logbook lenders

23 June 2014

Citizens Advice warns that without a change in the law, more and more innocent second-hand car buyers could have their vehicle taken from them because of an outstanding logbook loan from the previous owner.  

New research with 874 used car buyers, released by the national charity today, finds:

  • 63% of used car buyers did not check if the car they were buying had an outstanding loan attached;
  • 2 in 5 drivers have never heard of a log book loan;
  • 44% did not know they could have their car taken away by a log book lender, even if they are not the original borrower.

Logbook loans, officially called bills of sale, are often taken out against a car.  If a borrower fails to repay the loan, the car can be seized by the lender.  But if the car is sold on while the loan is still outstanding and payments are not being made the logbook lender is legally entitled to take away the vehicle from the new owner.  

Evidence from Citizens Advice, released earlier this year, found one in five people who reported a problem to Citizens Advice about logbook loans had had their car repossessed despite not being the original borrower.  

Analysis from the charity also found the number of logbook loans taken out this year could reach 60,000; a rise of 61% on 2011.  An increase in loans means an increase in risk for used car buyers.

One man came to Citizens Advice after he had spent £1,100 on a second-hand car but a few weeks later he received a letter from a logbook loans company saying he owed £637.  Despite contacting the loan firm to explain the car had be sold to him and providing the loan firm with the seller’s address, someone still turned up to take the car away.  Worried he would lose his car and not have a way to get to work, he borrowed money in order to pay off the other person’s loan.  

Drivers can carry out checks to see if there is a loan attached to a car before they buy it. But not all loans will show up and often there is a cost for searches to look for loans.  

Citizens Advice wants the law to be changed so that logbook lenders cannot repossess someone’s car if they are not the original borrower.  People who take out logbook loans also need better protections to make lenders treat them fairly.  

Citizens Advice Chief Executive Gillian Guy said:

“It is basically legalised theft that logbook lenders can take cars from people who are not the borrower.  Innocent drivers should not have to bear the burden of someone else’s debt.  Some motorists have been so desperate to keep the vehicle that they’ve paid off the previous owner’s loan.  

“Logbook loans do not just present a problem for car buyers – borrowers themselves are being exploited.  The industry is rife with irresponsible lending and some people are signing up to logbook loans not knowing the full implications because the outdated language wasn’t clear.

“I am pleased that the Government has listened to the problems raised by Citizens Advice around logbook loans and has asked the Law Commission to take a look at these rules.”

Evidence, released by Citizens Advice earlier this year, revealed some logbook lenders are behaving aggressively – with one Citizens Advice client even reporting death threats.  The research from January found:  

  • 14% experienced harsh debt collection practices
  • 28% were not treated fairly or appropriately by the lender
  • 8% were hit with high charges for defaulting on their loan
  • 17% had not had the terms of the loans clearly explained in a way they understood
  • 9% had a lack of proper checks to make sure the borrower could repay
  • 17% had their car taken away despite not being the original borrower.

Notes to editors:

  1. Citizens Advice ran an online survey between 10 April until 31 May 2014, 874 drivers who had bought a second-hand car responded to the research.
  2. Citizens Advice calculated that logbook loans could reach up to 60,000 this year by multiplying the number of loans registered in the first two months of this year by six, to give a twelve month estimate.
  3. Citizens Advice analysed 117 logbook loan client cases recorded in bureaux from 1st February 2011 to 7th January 2014 and 145 client cases recorded through the consumer helpline from 1st April 2012 to 6th January 2014.
  4. This year the Citizens Advice service celebrates its 75th anniversary. We’ve planned a year of activity running from January to December 2014. Contact the press office to find out more.
  5. The Citizens Advice service comprises a network of local bureaux, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
  6. The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  7. To find your local bureau in England and Wales, visit You can also get advice online at
  8. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers
  9. Citizens Advice Bureaux in England and Wales advised 2.1 million clients on 6.6 million problems from April 2012 to March 2013. For full 2012/2013 service statistics see our quarterly publication Advice trends
  10. Citizens Advice service staff are supported by more than 22,000 trained volunteers, working at over 3,000 service outlets across England and Wales.