There has been a widespread commotion in the country with the discovery of second-hand vehicles having logbook loans against them. The sad part was that most of these buyers weren’t even aware of what those loans were in the first place. Now, the big question is, if a vehicle is being used as collateral against a logbook loan, is it still possible for the owner to sell it? Well, our answer to that is both yes and no.
No, it’s not morally right to do so, but yes, it is possible. In fact, there are some vehicle owners who purposely take out a loan against their car to and sell it right after to unknowing buyers. Unfortunately for the buyer, they spend thousands of pounds for purchase and repairs, only to find a lender knocking on their door, leaving them with only two choices- pay for a debt they didn’t even owe, or let the lender take the vehicle away. Neither of the two choices is easy to accept, and unfortunately, the buyer rarely has a strong case. Because of the Victorian Law known as the Bill of Sales Act, logbook loan deeds are legally binding, and even after selling the vehicle, the original debt remains.
So why does it happen? The buyer has checked for the car’s history, and confirmed it wasn’t stolen. Despite everything appearing legit, you can never be fully safe whenever buying second-hand vehicles. So what should you do? If avoiding used cars altogether is out of the question (and budget), here are some measures you can observe to make sure you’ll never fall victim for second-hand car traps.
1. Only Buy from Reputable Dealers
If you’re thinking of purchasing a used automobile, at least do it properly. While there’s no 100% safe source, buying from a reputable dealership can at least limit the risk on your part significantly because of two reasons- first, these dealers abide by a Code of Practice, and second, because these dealers have a reputation to take care of and it’s highly unlikely for them to purposely sell vehicles which are under financing. Shop around and ask people you know for recommendations.
2. Take the Car for a Test Drive
Never take a car home before actually performing a test drive on it. Check the seatbelts, tyres, headlights, steering wheels, and brakes. Any safety concern might mean the vehicle will not pass the MOT and can cause you serious problems.
3. Perform a Full HPI check
Sometimes, even after going through other vehicle data checks, it’s impossible to find out if the vehicle you bought is under any financing or has a logbook loan secured against it. The only thing you can do to make sure is to perform a full HPI check for £19.99, a small fee which ensures that you are covered for up to £30,000. While some unscrupulous lenders may not register the bill of sale, you have a strong case in court if the loan was not recorded in HPI, because according to the Code of Practice, all logbook loans should be registered properly. You’ll also find out through an HPI check if the vehicle has been an insurance write-off or has been stolen.
4. Check the Mileage
Lastly, before buying the vehicle, make sure to check the mileage for any signs of tampering, like if the odometer numbers are out of line. A car with higher mileage is more likely to have mechanical problems. You can check on the mileage by looking at the MOT and DVLA details.
5. Read the Fine Print
Never commit to buying the vehicle unless you’ve fully read and understood the terms and conditions. Be wary of “no refund” or “sold as seen” policies, wherein you can get caught in unscrupulous terms. Make sure that the vehicle you are buying fits the descriptions and satisfies your requirements. If it’s lacking in any way of what was promised to you, you should be able to request a replacement, repair, and even a refund.
What Should You Do if a Lender Tries to Take Away Your Vehicle?
1. Request for Proof
Unfortunately, a logbook loan lender can repossess the vehicle even without court order, so that’s something you can’t do anything about. But before letting anyone inside your premises, please make sure that you are safe. Ask for the person’s proof of identity or authorisation to take the vehicle. Also request for the bill of sale which is evidence that the car rightfully belongs to them, and if possible, check with the Citizens Advice is this sale is valid.
2. Call the Police as Necessary
If the lender or agent misbehaves and you feel threatened by their action, it’s time to call the cops. After the car has been taken from you, make a record of the company’s contact details, and request for a confirmation of what was taken and put it in writing.
3. Decide on the Best Course of Action after Repossession
Unfortunately, if the bill of sale was recorded properly in accordance to the Code of Practice, there’s little you can do. Even if you try to reclaim your cash from the seller, oftentimes there’s little chance to get your money back. The next thing you can do if you really want the car is to pay off the loan yourself and bring the person who sold it to you to court. If you just want your money back, bring the person to court, but then again, there’s no guarantee you will win.