Logbook Loans And Trust Deeds
What Is A Logbook Loan?
A logbook loan is credit secured on your vehicle. You sign a “bill of sale” which can get registered with the court. The lender owns your vehicle until the debt gets repaid.
Interest rates are high; 300% APR (or more) is common.
You keep using the vehicle. You’ll lose your vehicle if the debt isn’t repaid.
Logbook Loans in Scotland
Logbook loans work differently in Scotland. Bills of sale aren’t used here.
A different type of credit agreement gets used. It might be “hire purchase” or “conditional sale”. This gives you some protection if something goes wrong.
Defaulting On A Logbook Loan
Your car may be at risk if you default on the loan.
We recommend that you contact the lender if you cannot pay. Try to reach an agreement with them. This reduces the risk of repossession.
Priority Debts
There are two types of debts; priority and non-priority.
Priority debts include mortgages, rent, and council tax. They include utility bills and vehicle finance. They’re the vital services you rely upon. Harm will be caused if you lose them.
Non-priority debts include credit cards, unsecured loans, and overdrafts. They include payday loans and catalogues.
If there isn’t enough money for everything, pay priority your debts first. If you need your car, your logbook loan is a priority debt. Pay it before you repay any non-priorities.
Getting Debt Advice
If you’ve taken a logbook loan, you may be struggling with other debts.
Debt advisers help you to prioritise payments. They identify ways to deal with non-priority debts.
They also offer advice about your rights. Your agreement may be “hire purchase” or “conditional sale”. Both types of agreement give you rights and some protection.
The adviser may help you to keep your car.
Debt Solutions In Scotland
Several debt solutions can tackle your non-priority debts.
The repayments to these debts are reduced. This may free up cash to pay your car loan.
The options are:
• Protected trust deed
A debt adviser will identify options suiting your needs.
Will A Trust Deed Help?
If you need your car you can’t put a logbook loan into a trust deed. The vehicle is at high risk of repossession if you do.
A Scottish trust deed can reduce payments to other debts. This may free up enough cash to keep paying your logbook loan.
More Information
For further logbook loan information, visit Money Advice Service.
Get In Touch
Our debt advisers can help you.
For debt advice on logbook loans, please contact us.