Log book loans in an IVA

[adam090376]

Hello All
Just to let you know my paperwork has now been passed from Thomas Charles to a company called Accuma in Manchester I have heard the name on this forum just wanted to know if anyone had any good/bad feedback on this company? I havent heard from them yet but they have only had my paperwork since Friday 11th so I guess I should get a call from them soon. Main reason for post is that I was wondering what Melanie and the other experts think will happen with a log book loan I have in my proposal have you ever had them in an IVA? Thomas Charles have advised me to carry on paying it unitl Accuma get in touch. But just trying to work out what will happen with it as no one seems to know wehter it wil be an expense or go into the iva as a creditor. If it goes into the IVA it will work out better for me but need to know so I can plan what I may need to pay for next 5 years. Good luck to anyone waiting for meeting results hope all goes well for you.

[MelanieGiles]

Hi adam

A log book loan is really nothing more than the garage holding a lien over your vehicle until the debt is paid in full. They really have no substance in law, as title to you passes as soon as the contract is made.

I am hoping that Storm is around this evening, as he is more of an expert on the legalities of this than I am. Storm, these type of loans seem to becoming more popular - can you give us definitive advice on the rights of both sides please?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Storm]

From my experience the companies providing these loans have moved away from simply contractually implying a lien over the asset.

At the point of taking the loan out two documents are signed -

1. A credit agreement
2. A Bill of Sale - which legally transfers ownership of vehicle for the period of the loan.

On this basis they can and will reposses the vehicle if payments are not made.

I have extracted some product detail below which actually highlights there process / T&C's.

Must reside in England or Wales
Must be at least 18 years of age
Must have a regular income sufficient to meet the repayments of the Loan
Must be the legal owner of the vehicle
The vehicle must be covered by a paid, fully comprehensive Insured Policy and have a valid MOT and Vehicle Licence
The Trade Value of the vehicle must be greater than £1000
The vehicle must not be the subject of any outstanding finance

Lend up to 50% of the Trade Value of the vehicle, valued according to Glass’ Guide.
The minimum value of a Loan is £500.00 (50% of the Trade Value)
Lender to retain the original V5/Logbook, MOT Certificate and Insurance Certificate.
The Loan may be repaid over any period between 13 weeks and 50 weeks. The maximum period for repayment is 50 weeks.
Early settlement of the Loan will incur an Administration Fee equivalent to 4 weeks of the Interest charged on the Loan.
Interest will be charged at 9.25% per month (APRs vary according to the repayment term and will be confirmed prior to execution of the Loan) As an example, a £1000 Loan with repayments over 24 weeks will result in weekly repayments of just under £65.00

Further Information:-

If the borrower fails to make repayments against the Loan, the lender is entitled by Law to take possession of the vehicle.
If the borrower fails to pay instalments at the correct time, a Reminder will be issued
If the borrower fails to respond to the Reminder within 7 days, a Default Notice will be issued
If the borrower fails to respond to the Default Notice within 7 days, a Termination Notice will be issued.
After a further period of 5 days, the lender will legally take possession of the vehicle at any time
Administration Costs in the pursuance of overdue payments, trace and recovery, repossession, storage and sale are added to the balance of the Loan and must be repaid.

Hope this helps......

[Adam Davies]

Hi
As usual Storm has come up with the goods.
I suggest that you keep up with payments as Thomas Charles states until you get advice from Accuma. I can see two scenarios,ONE your creditors will accept your IVA and allow you to make payments outside of this until the loan is paid[their max loan is a year so should be only a few months]TWO you have to stop paying this loan they will repossess the car and the shortfall[if any]can be included within yor IVA.
regards

Andy Davie
IVA.co.uk Spokesperson and site manager
(aka Neverending)

Please check out my blog: http://andydavie.blogs.iva.co.uk

View my profile here:
http://www.iva.co.uk/andy_davie_profile.asp

[adam090376]

Hi All
Thank you for your replys. I spoke with Accuma yesterday and they have said that they are not putting the loan into the IVA instead they are going to put it as an expense as the loan is secured against the car which once finished and paid off this extra money will go into the IVA. I need to keep paying this loan off as I need the car to get to work. Happy to do this as I get to keep the car and once finished my creditors get more back hopefully helping to get the IVA accepted. Also whilst speaking to Accuma they have said that I am also to stop paying HFC bank who I have make a payment to every month for a laptop I brought from PC World. The reason they gave for this is that HFC have paid PC world and so now this loan goes into the IVA as it is not relally a HP agreement. He said I can keep the laptop so that sounds good. Do you agree? Once I have the proposal from Accuma which should be next week I will post the details on here for your advice on how you think it could go. Thanks Again.

[Adam Davies]

Hi
Yes the laptop is not a hp agreement and the loan that was used to purchase it was a personal loan.
Good Luck

Andy Davie
IVA.co.uk Spokesperson and site manager
(aka Neverending)

Please check out my blog: http://andydavie.blogs.iva.co.uk

View my profile here:
http://www.iva.co.uk/andy_davie_profile.asp

[adam090376]

Thanks for that Andy
Just had Accuma on the phone as the IP there has questioned the interest rate on the log book loan I have as they think it is way to high at nearly 300% and have surgested I go to the office of fair trading regarding the rate. He has said that it cant do any harm to write to the OFT what do the experts think? They have said that nothing might happen but one the other hand they could get the rate reduced or get the loan unsecured and put into the IVA. I will look into this even though I know I signed the contract I now think that they prey on desperate people and then charge these rates with the security of if people dont pay they get a car instead. Thoughts anyone?

[Storm]

There have been a number of complaints about log book loans but the OFT has upheld none of them.

The worse I have seen was 1200% APR.

[Skippy]

That is terrible - I can't believe the OFT isn't interested.

Yesterday is history, tomorrow is a mystery, today is the present - a gift to make the most of.

View my blog at http://skippy13.blogs.iva.co.uk/

[MelanieGiles]

Seems that "log book loans" are to be avoided like the plague - and thanks once again to Storm for that advice.

Storm - how does one determine whether a loan is a log book loan or not? What is the description of the product on the actual finance agreement?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Oliver]

The only time I have seen this is with the actual company Log Book Loans and the wording on the credit agreement was a Fixed Sum Loan Agreement.

Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp

[adam090376]

Well it looks like I will just have to take it on the chin and take it as a lesson learned. The problem is that they will always be able to get people becasuse there are no credit checks so when you are desperate like I was at the time of getting the loan you see no credit checks and take the money regardless of the interst rate you kind of accept it at the time as you need the money. My log book loan is with with the company called Log Book Loans Oliver so it could have been my case you looked at as Thomas Charles hepled to get me started on the IVA before passing it to Accuma.

[Oliver]

I think it probably was Adam. The paperwork was very ambiguous to say the least. It was titled as a Fixed Sum Loan Agreement (often a very good indication of a secured loan) and also in the terms and conditions it stated that in the event of non payment "You could be charged late payment fees and your credit history could be adversely effected" no talk of repossession at all. Like you say Adam I think it's definitely one to look out for in the future. Why not contact Trading Standards because as the IP says this can do no harm. Also the most important thing is that the IP will ensure you get to keep a vehicle which was the main concern.

All the best Adam.


Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp

[adam090376]

Thanks Oliver
Will look into it with the trading standards people. As you say though the most important thing is to keep the car and if to pay them to this then so be it. Just a note to other beware the log book loan!!!

[MelanieGiles]

I don't agree - a fixed sum loan agreement is usually unsecured. And if there is no provision for using the asset as security, I question the legality of them retaining the log book at all, when title to the vehicle must clearly pass at the time the deal is struck.

Storm - can you clarify this point please. Are you saying that the customer effects a bill of sale to LBL for the period of the loan?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk