Present trend of expenditures and savings has changed the significantly. People no longer accumulate savings for big investments or to meet their day to day requirements. This is an era of plastic money. People do not believe in keeping cash in hand. All the expenses are generally done through credit cards or by availing loans.
Easy access to credits and loans have increase buying power of customer and there are more and more financial products coming in market for fulfilling different financial needs of customer.
One of such financial product is Logbook loan. It is a short term loan secured on your vehicle logbook; in return you can borrow money ranging from £500 to £50,000. The logbook is returned to owner after settlement of loan. The concept of logbook loan is prevalent in UK only.
The amount borrowed is returned in monthly installments which comprise of principal amount and interest. Although the monthly installment might seem small but the interest charged is high. Borrower gets the convenience of instant cash and easy refund; in return lender enjoys high profit on the loan amount.
Logbook UK loan providers extends theses short term financing and earn huge profits. Borrower ends up paying approximately 400% APR. The payback period of Logbook UK loans vary from six to thirty six months.Many Logbooks UK loan providers also gives option for early settlement without any foreclosure fee or penalty. Entire process of getting the loan can be completed online and loan can be approved within 24 Hrs. Undoubtedly, Logbook loan is one of the key financial instruments and it is helping lot of people in case of emergency.
An investigation for BBC has discovered that second hand buyers of cars are being chased by previous owners who have taken loans for hundreds of pounds. The investigation revealed that in such loans for UK, owners who have raised finance with logbook loans secured on their vehicles are selling their vehicles before settling their accounts. These loans leave the innocent third-party buyers liable for previous owner’s debts.
The loans for UK are secured using a Victorian law called the Bill of Sales Act, they offer very poor protection to the customers. A borrower taking a logbook loan hands the ownership of the vehicle over to the lender, which implies that he no longer has the ownership of the vehicle. But some unscrupulous borrowers sell it to innocent third party buyers who also end up having no rights of ownership which they are not aware of.
The Trading Standards Institute has called for a ban on such type of loans, but the government has reject their appeal and claims to bring a new industry code of practice that will offer consumers greater protection.
Some buyers reported such incidents to the agency saying that they were first time buyers who were happy to make a purchase with the hopes that it would last for life. But when they received random calls saying that they weren’t the legal owners they were in for a shock, they had to in fact pay up more money to buy what they thought was already theirs.
