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|Action on logbook loans ‘should make a significant difference’|
|Tuesday, 13 September 2016|
The Law Commission has today published its report on Bills of Sale, announcing a series of recommendations to protect borrowers from 'unfair' logbook loans.
Logbook loans are a way for borrowers to use their vehicle as security for a loan. Borrowers who fall behind with payments can find their vehicle swiftly repossessed, as well as high charges escalating the outstanding loan. The loan follows the vehicle, leaving some third-party buyers unexpectedly finding themselves facing the loss of the vehicle they have bought in good faith.
The Law Commission's report recommends similar protections for borrowers and buyers as those offered by hire purchase law, through a new Goods Mortgages Act to replace 'archaic' Victorian Bills of Sale legislation.
The Commission visited National Debtline last year as part of its review.
Jane Tully, director of external affairs at the Money Advice Trust, the charity that runs National Debtline, said: "While we would have preferred to see a recommendation for logbook loans to be banned all together, this report is good news for consumers at risk of falling victim to this unusual form of borrowing.
"Logbook loans are relatively few in number compared to other forms of borrowing, but they can cause significant difficulties. At National Debtline we helped more than 600 people who were struggling to repay logbook loans last year - including some who have discovered that a loan is attached to a second hand vehicle they have bought.
"If they are implemented, the Law Commission's recommendations should make a significant difference in protecting borrowers and vehicle owners. We would urge the government to still keep this issue under review, and return to the option of a ban on logbook lending if problems persist."
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