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Logbook loan ad banned for unclear interest rate

23 Ebrill 2014

An advert for logbook loan broker Rocketcash has been banned by the Advertising Standards Authority because details of the APR were neither clearly audible nor visible.

Just last week Citizens Advice expressed concerns that up to 60,000 logbook loans could be taken out this year – 61% more than in 2011.

Citizens Advice Chief Executive Gillian Guy said:

“Logbook lenders are saddling people with huge debts that take years to pay off.  Adverts that aren’t clear on how much a loan costs are irresponsible and should not be on air.

“Citizens Advice helps people whose debts have ballooned to eight times the original cost of the loan.  Often the terms and conditions aren’t clearly explained and there is a lack of checks to establish it the borrower can actually pay it back.

“Consumers should be given all of the details about what a logbook loan entails so they can make an informed decision if it is right for them and whether they can afford to repay.  There needs to be a change in the law which forces lenders to get a court order before they can take someone’s car away.”

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.

The average loan reported to Citizens Advice is £1,286 but some people had borrowed as much as £19,000 and people had paid up to eight times the original loan by the time they got help from Citizens Advice.

The evidence from earlier this year also finds:

  • 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.

Citizens Advice is running a short survey to find out about people’s experiences of logbook loans and buying a used car.  You can take part here.

Notes to editors:

  1. 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.
  2. 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.
  3. To find your local bureau in England and Wales, visit citizensadvice.org.uk. You can also get advice online at adviceguide.org.uk
  4. 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
  5. Citizens Advice Bureaux in England and Wales advised 2.3 million clients on 5.4 million problems from October 2013 to September 2014. For full 2013/2014  service statistics see our quarterly publication Advice trends
  6. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 3,000 service outlets across England and Wales.