Logbook loans on cars signal rising debt risk
- Credit: PA Wire/Press Association Images
Consumers who buy second-hand cars are at risk of unwittingly inheriting debts taken out by the previous owner that could end up with their vehicle being seized, Citizens' Advice is warning.
The charity said one in five people who reported a problem to it about 'logbook loans', where a person places their car as security against a loan, had the car repossessed despite not being the one who borrowed the money.
Citizens' Advice warned someone who buys a car which was still the subject of an outstanding logbook loan taken out by a previous owner could end up being chased for the debt – leaving them with the choice of making the repayments or having their vehicle repossessed.
It fears that the risk of this happening is growing, with an estimated 60,000 logbook loans set to be taken out this year – 61% up on 2011.