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A logbook loan is a form of secured lending in the
United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the continental mainland. It comprises England, Scotland, Wales and No ...
and is the most common modern example of a security
bill of sale A bill of sale is a document that transfers ownership of goods from one person to another. It is used in situations where the former owner transfers possession of the goods to a new owner. Bills of sale may be used in a wide variety of transaction ...
. Borrowers transfer ownership of their car, van or motorcycle to the logbook lender as security for a loan. While making repayments borrowers keep possession of their vehicle and continue to use it. When the logbook loan is repaid, the borrower regains ownership of their vehicle. Borrowers hand the logbook lender the V5C registration document - or "logbook" - but this is purely symbolic and has no legal effect. If the borrower defaults, the logbook lender can seize the vehicle and look to the proceeds of sale for satisfaction of the loan. Unlike a car
title loan A title loan (also known as a car title loan) is a type of secured loan where borrowers can use their vehicle title as collateral. Borrowers who get title loans must allow a lender to place a lien on their car title, and temporarily surrender the ...
in the United States, the logbook lender can, under English law, seize the vehicle without a court order. In England, Wales and Northern Ireland, logbook loans are regulated by the Bills of Sale Act 1878 and Bills of Sale Act (1878) Amendment Act 1882. FCA compliant logbook lenders utilise your vehicle as security using a Bill of Sale, granting temporary ownership during the term of an agreed loan. However, the Bills of Sale Act (1878) has no jurisdiction in Scotland, and very few lenders are able to give loans. As a solution, a small pick of lenders have managed to lead the way forward in delivering logbook loan services to Scottish residents. Logbook loans and the Bills of Sale Acts have been subject to much criticism. In 2009, a consultation by the Department for Business, Innovation and Skills examined the Bills of Sale Acts and proposed that bills of sale for consumer lending, such as logbook loans, should be banned. The government's response to the consultation was published in 2011. The response left the Bills of Sale Acts intact and led to the introduction of a voluntary code of practice for logbook lenders. In 2014, the Bills of Sale Acts were once again examined, this time by the Law Commission for England and Wales. The Law Commission published its consultation paper on 9 September 2015, and a proposal for change in 2017.


See also

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Title loan A title loan (also known as a car title loan) is a type of secured loan where borrowers can use their vehicle title as collateral. Borrowers who get title loans must allow a lender to place a lien on their car title, and temporarily surrender the ...
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Payday loan A payday loan (also called a payday advance, salary loan, payroll loan, small dollar loan, short term, or cash advance loan) is a short-term unsecured loan, often characterized by high interest rates. The term "payday" in payday loan refers to ...
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Cash advance A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt (i.e., promise to the card issuer to pay them for the amounts plus the ot ...


References

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