Citizens Advice has highlighted the danger of some logbook lenders getting away with misleading borrowers and has called for a clamp down on the logbook lending market, following new evidence from the Financial Conduct Authority on the poor treatment of consumers by these firms.
Chief Executive of Citizens Advice, Gillian Guy, said:
“Some logbook lenders lure people into debt by hiding crucial details of the loan. People are reporting to Citizens Advice that lenders aren’t checking if they can afford the loan and in some cases the terms of the loans aren’t being explained. One person took out a loan against their car for £19,000.
“It is dangerous for lenders to be getting away with not giving borrowers the full picture of what a logbook loan entails. People need to be able to make informed decisions about whether a loan is right for them and they can repay it, especially if they are already struggling to get by.
“Innocent third parties are being caught in the net by logbook loans that they unknowingly inherit when they buy a used car. Citizens Advice helped one man who lost his car after spending £2000 buying it online and fixing it up.
“The Financial Conduct Authority must clamp down on a logbook lending market that is misleading people. The law needs to change so third parties are protected from logbook loans taken out on used cars so that consumers don’t face this risk when buying a used car.”