Beware logbook loans on second-hand cars

23 June 2014

eating in the car Most of us drive second-hand cars because we're not made of money. There's a whole load of pitfalls when buying a car that isn't new, but one is often overlooked and particularly troubling.

Drivers could well inherit debts which have been taken out by previous owners of the vehicle you bought, which means you could see your car being seized, when it isn't your fault.

The Citizens Advice have sent out a warning after stating that one in five people who reported a problem to them about logbook loans, they ended up having their car repossessed despite not borrowing the money themselves.

What happens is, someone takes out a logbook loan and they put their car up as security. Like using a pawnbroker, the full ownership of the car is retained by logbook loaner until the debt has been paid off in full.

Citizens Advice have warned that you might buy a car that is still the subject to an outstanding logbook loan taken out by the previous owner and you, who have done nothing wrong, ends up being chased for the debt.

There's an estimated 60,000 logbook loans to be taken out this year, which is a 61% increase on 2011. The CA survey regarding drivers who had bought a second-hand car found that 63% did not check if the car had an outstanding loan.

As such, they'd like to see the law changed so that the car cannot be taken if the owner is not the original borrower. The person should own the loan, but the thing they put up as security.

Citizens Advice chief ­executive Gillian Guy said: "Innocent drivers should not have to bear the burden of someone else's debt."

Sadly, at the moment, there's no way of telling whether or not the car you're buying has a logbook loan attached to it, which is why it has become such a problem. However, the Citizens Advice do have a guideline about the whole thing.


  • Life’s G.
    Well, how about telling us the best way to check if the car has an outstanding loan on it then? C’mon, finish what you started.
  • Euan
    Obvious gotcha is that if you make the change, then that's the end of logbook loans isn't it. Fall behind on your loan? Sell the car to a mate for a quid... and the lender can't touch it.
  • eBay P.
    [...] Problems included scams advertising housing and job scams, as well as motorists buying second-hand cars and then finding out that there was a logbook loan attached. [...]

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