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Logbook lenders that hide details “lure people into debt”

5 June 2014

Citizens Advice has highlighted the danger of some logbook lenders getting away with misleading borrowers and has called for a clamp down on the logbook lending market, following new evidence from the Financial Conduct Authority on the poor treatment of consumers by these firms.

Chief Executive of Citizens Advice, Gillian Guy, said:

“Some logbook lenders lure people into debt by hiding crucial details of the loan. People are reporting to Citizens Advice that lenders aren’t checking if they can afford the loan and in some cases the terms of the loans aren’t being explained. One person took out a loan against their car for £19,000.  

“It is dangerous for lenders to be getting away with not giving borrowers the full picture of what a logbook loan entails. People need to be able to make informed decisions about whether a loan is right for them and they can repay it, especially if they are already struggling to get by.

“Innocent third parties are being caught in the net by logbook loans that they unknowingly inherit when they buy a used car. Citizens Advice helped one man who lost his car after spending £2000 buying it online and fixing it up.

“The Financial Conduct Authority must clamp down on a logbook lending market that is misleading people. The law needs to change so third parties are protected from logbook loans taken out on used cars so that consumers don’t face this risk when buying a used car.”

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.