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Vehicle Equity Release
The alternative to a logbook loan

A fairer and quicker way to release the cash from your car

The Original Logbook Loan

The Growth of the Logbook Loan

Over the last 15 years, there has been a significant growth throughout the United Kingdom of people using their vehicle as security for obtaining short-term credit, often referred to as a ‘Logbook Loan’ or ‘Vehicle Equity Release’.

A Logbook Loan is a type of loan that allows car owners to withdraw equity from their car, providing its free of finance. The owner puts the car up as security against the loan and can retain full personal use of their vehicle for the duration of the loan. The original Logbook Loan use a Bill of Sale to secure the car against the loan via the Bill of Sale Act of 1882 and a consumer credit agreement against the borrower.

Bills of sale are incredibly old and date back to the late 18 century and were used originally goods such as dogs, horses. Its only in recent years have been adapted for homes and vehicles. The role of the bill of sale is to transfer ownership of the item between parties. The bill also acts as evidence of the transaction and will record all relevant information such as date, location and monies transferred in consideration.

What is the role a Bill of Sale have in a Logbook Loan?

In England, Wales and Northern Ireland, a Logbook Loan comprises of a Bill of Sale agreement and Consumer Credit agreement securing the loan on the vehicle. However, the borrower will also be required to surrender your V5C logbook and often the spare key.

Upon signing both agreements, the ownership of the vehicle is transferred to the lender. This is then stamped in the Royal Courts of Justice within 7 days and the Bill of sale is then valid. In addition, a Bill of Sale offers limited protection or recourse for borrowers. More importantly, it extends powers to the lender to allows repossession without a court order if the borrower defaults on two payments.

It’s worth noting, England, Wales and Northern Ireland recognises a Bill of Sale by law, however in Scotland these documents are illegal are therefore not used.

When the loan is settled by the borrower, the Bill of Sale that is linked with the Logbook Loan and vehicle becomes invalid and the car’s ownership transfers back immediately.

Bill of sale are regulated by two Victorian acts of law:

  • The Bill of Sale Act 1878, and
  • The Bill of Sale Act (1878) Amendment Act 1882.

According to the Law Commission, Bill of Sale's are antiquated and fraught with problems, both legally and practically as they:

  • Allow vehicles to be repossessed on two payment defaults without a court order, offering no protection for Borrowers
  • Give no protection to third party purchasers who unwittingly buy goods subject to Bill of Sale

In Scotland, Logbook Loans using Bill of Sale are not allowed under Scottish Law.

Rather, the Borrower signs an ‘agreement’ transferring ownership of the vehicle to the lender and the Borrower hires the vehicle back under a Hire Purchase (HP) agreement. The Borrower still retains full use of the vehicle providing payments are maintained and full ownership reverts to the Borrower when the final payment is made. Hire purchase agreements are regulated under current consumer legislation and are considered fit for purpose.

Over the last few years, the Government has been modernising regulation of the consumer credit market to ensure that it is fit-for-purpose and provides adequate consumer protection.

As part of this agenda, in 2014 the Government transferred responsibility for consumer credit regulation from the Office of Fair Trading (‘OFT’) to the Financial Conduct Authority (‘FCA’).

Responsibility for the regulation of consumer credit has enabled the FCA to tackle some concerns about Logbook Loans Lenders such as aggressive debt collection practices, but the FCA does not have the power to update the out-of-date legislation.

In 2015, the Law Commission initially consulted on the reform of the existing legislation and its final report and recommendations to reform the Bill of Sale Acts (Logbook loans) were published in September 2016.

It concluded that the current law is archaic and wholly unsuited to the 21st century. It recommended that the Bill of Sale Acts (Logbook loans) should be repealed in their entirety and replaced with a new “Goods Mortgages Act” to govern the way that individuals may use their existing goods as security for a loan or other obligations.

The aim of the proposed new legislation was to replace the outdated Bill of Sale Act, with a modern legal framework largely based upon the ‘hire purchase’ consumer credit business model, which has been in existence for many years.

In May 2017, the Government decided to shelve the Law Commission’s review and recommendations to reform the Bill of Sale Act for Logbook Loans in favour of working the FCA as they carry out their high-cost credit review.

The 21st Century Alternative - The New Logbook Loan

The proposed Goods Mortgages Act was never designed to curtail the ability to use your car to release cash, rather ensuring greater consumer protection and more transparency to provide greater protection to Borrowers.

In June 2019, LoanOnYourCar.com entered the Vehicle Equity Release market as a direct lender with a New Logbook Loan product. It's aim was simple, to honour spirit of the shelved Goods Mortgage Act.

The new Logbook Loan still allows the borrower to retain full personal use of their vehicle for the duration of the loan, however it's secured against the car using a Hire Purchase Agreement regulated by the Consumer Credit Act. This is compared to original Logbook Lenders securing the car against the loan via the Bill of Sale Act of 1882.

  • Ethical & Responsible

    LoanOnYOurCar.com has established itself as an ethical and responsible lender in the UK specialising in Vehicle Equity Release. We use a regulated Hire Purchase agreement, rather than using the antiquated Bill of Sale as used by Logbook Loan providers.

  • A Proven and Preferable Solution

    LoanOnYOurCar.com are securing the Logbook Loan in throughout the United Kingdom using a Hire Purchase Agreement as regulated by the Consumer Credit Act 1974, which allows for the provision of a Scottish Logbook Loan.

  • The Gold Standard

    LoanOnYOurCar.com is committed to the highest levels of professional care, with its reputation and integrity being paramount.

  • Regulated and Accredited

    As a lender, LoanOnYourCar.com is regulated by the FCA and is a fully accredited member of the Consumer Credit Trade Association and fully complying with its 'Code of Practice'.

More importantly, our business ethos and culture are premised on the principles of 'treating all customers fairly'. LoanOnYourCar.com will be transparent, honest and fair. Every loan will be subject to affordability abd suitability checks to ensure the borrower is bale to maintain the loan repayments.

LoanOnYourCar.com mission is to become the the UK’s leading FCA Regulated Vehicle Equity Release specialist offering a proven and preferable Logbook Loan solution for people looking to raise short-term finance from their vehicles.

Logbook Loans Explained - New Logbook Loan vs Original Logbook Loan

Type of Credit Agreement

New Logbook Loan: Hire Purchase agreement - regulated by the Consumer Credit Act 1974

Original Logbook Loan: Bill of Sale agreement - regulated by the Bill of Sale act 1882


Home Visit Required

New Logbook Loan: You complete the loan online. A home visit is not required.

Original Logbook Loan: A company agent is required to meet you face-to-face in your home or place of work.


Speed of Completion

New Logbook Loan: Contracts issued online and signed via eSignature. Payment within 1 hour of receipt of all documents

Original Logbook Loan: Multiple loan agreements and supporting documents have to be physically signed and witnessed by a fully Independent 3rd party


Price

New Logbook Loan: Our representative APR is 204.2%. We are never beaten on price, we will beat any other Logbook Loan Lender offer by 10%

Original Logbook Loan: Logbook Loan Lenders typical APR’s range from 209% – 500%


Fees and Charges

New Logbook Loan: No set up fees, the customer can their loan early, penalty free and at any time. Borrowers can also make over payments at any time to reduce how much interest they pay

Original Logbook Loan: Logbook Loan Lenders may charge set up fees, penalties for settling early and excessive charges if the loan falls into default.

How does the New Logbook Loan from LoanOnYourCar.com work?

  1. LoanOnYourCar.com is a regulated primary lender in England, Wales, Scotland and Northern Ireland offering a new Logbook Loan
  2. Cars must be under 10 years old, free of finance and have a trade value of more than £2,500
  3. The loan amount will depend upon the current trade value and overall condition of the vehicle. Loan amounts range from £500 - £100,000 and we offer funding options up to 70% of the vehicle trade value
  4. Loans are subject to affordability and suitability based on the Borrower’s verified disposable income and out-goings
  5. With flexible repayment terms from 18 months to 5 years, the Borrower selects the most appropriate monthly repayment options. The Borrower can cancel at anytime penalty free
  6. Over-payments are allowed, and the interest is re-calculated, so reducing your overall repayments
  7. Monthly repayments are collected via continuous payment authority

Complete Your New Logbook Loan On-Line and Receive the Cash in 1hour

LoanOnYourCar.com will complete the loan application safely and securely online, with no home visit required.

The car inspection will be completed via 'WhatsApp' or ‘FaceTime’ on your mobile phone. Contracts are signed via email using e-signature and the borrowers supplies the supporting documentation by email.

We pay the money into the borrowers account within 60 minutes of receipt of the signed contract and loan documentation.

LoanonYourCar.com Responsible Lending Policy

As you would expect from an FCA regulated and ethical lender, LoanOnYourCar.com has a stringent process to ensure all lending is done responsibly and is affordable

In addition to a thorough affordability review, a Pre-Contract Credit Information document (SECCI) and a Borrower Information Sheet is provided for the applicant to read, review and discuss

How do I repay the loan?

At LoanOnYourCar.com we use Continuous Payment Authority, sometimes also called a ‘recurring payment’, to take an agreed amount from your bank account to repay you loan. We will ask you for the card number from which you wish us to collect your payments.

LoanOnYourCar.com will always agree the amount to be collected with you and you may choose the frequency of payments, for example, weekly/fortnightly/monthly.

We will never apply to take money from your account, or vary the amount, where you have not agreed this with us in advance.

What happens if I have difficulty making payment?

If this situation arises and you have difficulty in making payment, please contact us immediately. If we know there is an issue we can help. We will always act with forbearance and due consideration in resolving the situation. Please call us on 0333 577 5000 and choose option 2

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