Plans to ban logbook loans announced - Money - News - Moneyfacts

News

Plans to ban logbook loans announced

Plans to ban logbook loans announced

Category: Money

Updated: 04/04/2011
First Published: 22/12/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Bills of sales – typically known as logbook loans – could soon be banned, having been described as 'archaic' and from 'the days of Charles Dickens.'

A bill of sale is usually a loan secured against the value of a consumer's car, and has become to be known as a logbook loan.

First seen in 1878, the number of registered bills of sale has risen considerably recently, with 40,000 being made between April 2008 and March 2009, with the total value of the loans thought to be around £30 million.

However, the practice of logbook loans could soon be a thing of the past, after the Department for Business, Innovation & Skills announced plans to ban them.

"These bills of sale are archaic and allow vulnerable people's goods to be seized without a court order. They were developed in the days of Charles Dickens and don't meet 21st Century consumer standards," said Consumer Minister, Kevin Brennan.

"They can encourage people to slip even further into debt rather than taking control of their finances.

"We must consider all the options but it seems they don't fit easily into a modern consumer regime, which should allow honest businesses to thrive and offer adequate protection for consumers."

The Office of Fair Trading has said that over 1,000 people have complained about problems with such loans, with losses totalling almost £1.5 million in the last four years.

Citizens Advice has also said that the problem is getting worse, with a two fold increase in the number of enquiries relating to bills of sale in 2008/09.

It cited the example of a woman who took out a loan worth £500 to cover bills after her husband had lost his job and who has seen the debt grow to £1,500. Her car is worth less than £2,000 and the loan company already has the logbook for her vehicle.

The Government has launched a consultation seeking the views on banning the use of bills of sale for consumer lending; a voluntary code of practice or other non-statutory regulations; and targeted reform to bills of sale regulation.

Compare the best loans on the market using our Loans Best Buy charts.

Use our loan calculator to help you search and compare the cheapest loans to save you money.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Would you spend more for a character property?

We all have our own ideas of what makes a dream home, and for many, character features are at the top of the list. But how much more would you be willing to pay for those kinds of additions – and could they even help you save money in the future?

A quarter of Brits have fallen victim to a scam

Think you know how to spot a scam? It may not be as easy as you’d think, with 25% of Brits admitting that they’ve been the victim of one in the past, and a further 73% are concerned about being scammed in the future.

Brits’ bad spending habits revealed

Many of us like to think that we’re good with money, yet there are often things that get in the way of regular saving and financial security. Solution Loans has taken a look, and has identified the bad spending habits that leave us in the red.
 
Close