REPORT LOGBOOK LOANS
FOR: Law LTD.
REF: BBC Inside out London. Logbook Loans.
FROM: Dmitrijs Rezanovics
7th February 2014
Disadvantages of a logbook loan.
The logbook loani is a chattelii mortgage, a loan arrangement in which a car is used as security for the loan.
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. The loan company does not need a court order to repossess the car.
There are several disadvantages in signing up for logbook loan. First, high interest rates from 300 to 400 percent APR.
Dennis Richards without reading the contract carefully has agreed to pay 350 percent APR and also hidden admin fees for each received phone call or text message. That is significantly increased Denis’s debt.
Legal consultant Marcus Bright has introduced another disadvantage. He explained that some of the companies have advanced their contracts and “they are not being clear in the documentation, they are not transparent in the way they calculate interest charges”.
The third major disadvantage that had directly affected Carl Lee, who bought a car, that was under logbook loan contract. He was not aware that the car belonged to the loan company. Even if the original owner sells that car, but fails to pay the debt to the loan company, the car will be legally taken away from the new owner. Because the original owner stopped paying the loan back, the car that Mr. Lee has paid for, was taken away from him.
The logbook loan has originally been designed to benefit lenders and it exists in legislation from 1878.
Government would like to include the points of consumer protections into logbook loan contracts and it suggest consumers to deal with better known forms of financeiii. One of the recommended ways to prevent this happening in the future
REF: BBC Inside out London. Logbook Loans.
FROM: Dmitrijs Rezanovics
7th February 2014
Disadvantages of a logbook loan.
The logbook loani is a chattelii mortgage, a loan arrangement in which a car is used as security for the loan.
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. The loan company does not need a court order to repossess the car.
There are several disadvantages in signing up for logbook loan. First, high interest rates from 300 to 400 percent APR.
Dennis Richards without reading the contract carefully has agreed to pay 350 percent APR and also hidden admin fees for each received phone call or text message. That is significantly increased Denis’s debt.
Legal consultant Marcus Bright has introduced another disadvantage. He explained that some of the companies have advanced their contracts and “they are not being clear in the documentation, they are not transparent in the way they calculate interest charges”.
The third major disadvantage that had directly affected Carl Lee, who bought a car, that was under logbook loan contract. He was not aware that the car belonged to the loan company. Even if the original owner sells that car, but fails to pay the debt to the loan company, the car will be legally taken away from the new owner. Because the original owner stopped paying the loan back, the car that Mr. Lee has paid for, was taken away from him.
The logbook loan has originally been designed to benefit lenders and it exists in legislation from 1878.
Government would like to include the points of consumer protections into logbook loan contracts and it suggest consumers to deal with better known forms of financeiii. One of the recommended ways to prevent this happening in the future