Life in the UK is not easy, it is one of the most expensive countries in the EU to live in. It happens very often that people get into financial trouble and once there have little or no means to find their way out of it. Sometimes there are consolidation possibilities available, which they take advantage of, but still, until their credit rating is clean and has been clean for a while, there are as good as no possibilities allowing them get their hands on some cash quickly. There are payday loans, but there you only get your paycheck a bit in advance. If you own a car, that is largely debt free, you are in luck, because there are the so called logbook loans.
The concept is simple, you pawn your car for approximately the third it is worth and you get the money and keep the car for as long as you pay back the loan in time. Sounds simple, does it not? This scheme is based on a law called the bill of sale, which got appropriated and is used to allow the person giving the loan to sell the car quickly, if the debtor has stopped payments and defaulted on the loan. It circumvents the necessity to go through the court system immediately establishing the creditor with the necessary credentials and he can take over the vehicle at any time, after the contract violation has been established.
Nevertheless, if all runs well and the person who took out the loan still does make payments and all is well, he or she can keep using the vehicle. After the loan has been paid off, the logbook of the vehicle is returned to the original owner and the bill of sale is voided.
The positive side here is that the loan can be approved within hours, that there are generally no credit checks being made, that everybody with a car to his or her name can get this loan and that no obligations exist as to what the money is granted for.
The negative side are the high APR rates, which can go up to 400 or even 500 per cent, that there is no court protection, where the creditor needs to get a court approval first, before the car is being repossessed and that there is relatively little or no wiggle room for late payments.
Fortunately for loan takers, the logbook loan providers are now regulated by the governing body, any and all logbook loan providers need to have a Consumer Credit Licence, issued by the Financial Conduct Authority, warranting that the consumer will remain protected from any nefarious cons.