If a car is subject to a logbook loan, also called a bill of sale, the loan company is the legal owner of the car until the loan is paid off in full. If you buy a car that has a logbook loan on it and the person you bought the car from stops paying the money back, the finance company can repossess the car and keep it until the debt is paid in full. This applies even if you bought the car in good faith and did not know it had a logbook loan. The loan company does not need a court order to repossess the car.
This page explains what you can do if you find out the car you bought is subject to a logbook loan.
What can you do if the lender wants to repossess the car?
If you receive a letter threatening to repossess the car or an enforcement officer turns up at your home to take it, you may not be able to stop them. Follow these steps to keep yourself safe:
- ask to see proof of their identity and their authorisation to take the car
- ask to see the bill of sale document – they have to show you this if you ask for it
- if there is time, contact your local Citizens Advice Bureau for help finding out whether the bill of sale is valid
- if you feel threatened by how an enforcement officer is behaving, call the police
- never compromise your personal safety
- ask for written confirmation of what has been taken
- get the contact details for the logbook loan company.
What can you do if the lender has taken your car?
If the lender has taken your car, you can try to get it back and reclaim your money from the seller. However, this can be a costly and time-consuming process and is not guaranteed to succeed.
If you want to get the car back, you could pay off the outstanding loan and then take the person who sold you the car to court, to try to get your money back.
If you just want to get your money back, you can take the person who sold you the car to court.
Always get independent advice before you decide to take someone to court.
It is always a good idea to carry out a history check on a used car before you buy it. This can help reduce the chances of you finding yourself with a car that is still subject to a logbook loan.
If the car has not been registered correctly, a logbook loan might not show up in the history check. You should be suspicious if the seller can’t give you the registration document (V5) or can only provide a photocopy.
How to complain about a logbook loan lender
Some lenders are members of the Consumer Credit Trade Association (CCTA), which has a code of practice covering logbook loans. The code of practice says the lender must register the logbook loan on a register, so it will show up when you carry out a history check on the car. It also says they must obey certain rules when they repossess a car.
If you are unhappy with the way a logbook loan lender or its enforcement officers have behaved, find out whether they are a member. If so, you can complain directly to the CCTA.
Other useful information
Consumer Credit Trade Association (CCTA)
Suite 4 The Wave
1 View Croft Road
Tel: 01274 714959
Fax: 0845 257 1199