The National Association of Motor Auctions (NAMA) has responded positively to the government’s plans to reform the legislation that governs logbook loans, replacing them with a new type of loan called a ‘vehicle mortgage’
Logbook loans allow consumer takes out finance on their car securing the loan on its V5 or logbook. Unlike consumer credit, the loans do not have to be settled when the car is sold, which can cause problems for the new owner of the vehicle, who can be made to pay any outstanding debt – even if they have not taken out the loan.
Louise Wallis, Head of NAMA commented: “We are pleased to see that the government is to reform the legislation that governs logbook loans. Logbook loans have been problematic for the auctions and dealers, as well as consumers. Unlike vehicle finance, these loans do not have to be registered with the credit reference agencies, and so will not show up when a vehicle date check is carried out. This has meant that sellers are unwittingly selling vehicles with un-cleared finance to consumers.
“NAMA has campaigned for many years for a change in this law, and the government is now acting to introduce a new type of loan called a ‘vehicle mortgage’. These will have to be registered with credit agencies, giving sellers better protection. Furthermore, a consumer who unfortunately buys a vehicle with one of these loans will not be liable to the debt from a previous owner.”
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