The innocent drivers whove had their cars seized to pay the debts of former owners Cars used as security on loans with interest of up to 500 per cent Owners then sell cars on without telling buyers about borrowing Debt collectors repossess the vehicles, leaving buyers out of pocket By SANCHEZ MANNING PUBLISHED: 23:42, 15 February 2014 | UPDATED: 23:43, 15 February 2014 5 shares 10View comments +2 Kurtis Headley, 26, has become a victim of so-called logbook loans after buying a £1,200 car, only to find it had £800 of loans against it Hundreds of innocent motorists have had their cars repossessed because the vehicles’ previous owners had run up debts against them. In one case a man bought a Ford Fiesta for £1,200 through a website only to find the seller had borrowed £800 against its value and fled to Australia. He was told he must pay the vendor’s debt or give the car back. The Citizens Advice Bureau (CAB) is calling for Government action to tackle the growing phenomenon of ‘logbook loans’, where cars are being used as security for borrowing at rates of interest of up to 500 per cent by people struggling to get credit elsewhere. Borrowers then hand over their logbooks to the lenders and if they default on repayments their cars can be seized immediately. One in five of the people who had vehicles seized were not the original borrower, according to an investigation by the CAB. It wants logbook loans to be registered and lenders made to obtain a court order before they can take a car away. It also wants a ban on the repossession of cars that have been sold on with a loan. The CAB declined to name individual loans companies but said that lenders are using a Victorian law known as the Bill of Sale, which allows them to target people with poor credit rating and, if they then struggle with the payments, to seize their assets without going to court. More... Desperate parents give private schools a share of their home - just so they can pay childrens fees Barclays huge compensation bill for thousands of customers whose confidential files were sold to investment sharks CAB chief executive Gillian Guy said: ‘It is absolutely absurd that a firm should be able to take away someone’s possessions without any due legal process. ‘High interest rates and lack of affordability checks as well as threatening practices and phantom charges mean logbook loans are a toxic mix of the worst parts of payday loans and unruly bailiffs.’ More... Desperate parents give private schools a share of their home - just so they can pay childrens fees Barclays huge compensation bill for thousands of customers whose confidential files were sold to investment sharks The CAB’s investigation found that while the average logbook loan was around £1,286, some people had borrowed as much as £19,000. It also emerged that some borrowers were paying companies up to eight times the original loan and that some logbook loan companies were employing aggressive tactics to recoup debts. Ms Guy said: ‘One client came to us after her son received death threats when he was unable to pay back the £5,200 he owed for a £1,000 loan.’ A new code of practice was introduced for logbook loan lenders in 2011 to try to ensure the loans were being clearly registered and to stamp out irregular practice. But Ms Guy says most logbook loan companies have flouted this code and warned that this lending practice now threatened to become a worse problem than payday loans. +2 Car owners refused credit elsewhere are being encouraged to use their vehicles as deposits on loans She said: ‘Our evidence shows that logbook lenders have paid little regard to the voluntary code and highlights the need for a tough stance from the Financial Conduct Authority.’ Kurtis Headley, 26, from Bury, Greater Manchester, bought a car for £1,200 through a website six months ago but a month later two men arrived at his front door with a letter telling him to call a loan company. He then discovered the man who had sold him the car had a logbook loan with an outstanding debt of £800 and had fled to Australia. Mr Headley said: ‘The loan company are now saying that I have to pay the £800 or give the car back. I need the car because my grandmother isn’t well and she often needs me to drive her to the hospital. I’m advised that I can fight my case in the small claims court, but I’m not guaranteed success.’ A 34-year-old mother who took out a logbook loan described how she had her car snatched by the lender. She said: ‘One morning I was driving to my workplace when a tow truck suddenly stopped right in front of me, blocking my way. ‘The driver then came over to my car, reached through my car window and just grabbed my keys. ‘He then towed my car away and left me standing in the pouring rain.’ Share or comment on this article 5 shares by TaboolaSponsored ContentFROM THE WEB Peter Hargreaves: Why every investor should u… Hargreaves Lansdown Workplace Pensions: What Employees Need … Department for Work & Pensions ‘Warren Buffett Indicator’ Signals Collapse in Sto… Newsmax The Truth About the Ford Focus CarBuyer MOST WATCHED NEWS VIDEOS Previous 1 2 3 Next Russell Brand goes head to head with Jon Snow Lingerie woman is filmed doing a NekNominate strip in Asda Hilarious FAIL: Skimbles the cat makes no effort to jump Moment autistic boy gets gift of a truck from garbage man CCTV: Look over there! Mugger gets fooled and punched The Home Counties sinkhole that swallowed a CAR! 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Posted on: Sun, 16 Feb 2014 07:59:16 +0000
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