Car Cash Point, the UK's Logbook Loan Specialists has welcomed the Government's announcement that the industry will be working to a new Code of Practice from this month. A log book loan allows drivers to unlock the cash in their vehicle, providing secured loans against the car, while the customer continues to drive it. Car Cash Point has been working with the Department of Business, Innovation and Skills (BIS) to ensure best practice and regulation is adopted across the industry, where bills of sale are used.
A bill of sale is used to secure a loan on a consumer's personal property, in most cases a car. The consultation into bills of sale conducted by BIS, found that any ban on their use, would restrict consumer access to credit, reduce choice and increase prices. It also felt that it would be disproportionate to ban an entire industry due a one rouge lender, who had been using the bill of sale to sell used cars (this is not what they were intended for).
Chief Executive of Car Cash Point, Paul Hilburn said: "During the past few years there has been a dramatic increase in the number of people facing financial difficulty. Regrettably, there has also been a growth in the number of small, opportunist and often unethical Logbook and Payday Loan companies. Such companies may offer a quick loan often using extortionate interest rates, high fees and unscrupulous tactics for dealing with late repayments. I therefore welcome the announcement by the Government and there decision to introduce a clear Code of Practice. This will provide the customer with the comfort in dealing with a reputable lender like Car Cash Point".
There is a growing need for consumer credit in the UK which is not being delivered by the mainstream financial suppliers such as our banks and other financial institutions. Logbook loans are the ideal solution for customers with limited or no access to traditional funding to secure an instant loan from £500 to £50,000 credit against their car.
The new EU Consumer Credit Directive came into force in February 2011; the amendments to the Consumer Credit Act will strengthen both consumer rights and lenders' duties towards their customers, as well as provide standardised information for consumers.
Under the new rules customers will be able to have:
- Up to 14 days to cancel new loan agreements.
- The option to make partial early repayments on loans - at the moment borrowers are only able to pay the full amount off early.
Lenders will now have greater responsibility towards consumers and must:
- Give borrowers standardized pre-contractual information to help them compare different loans.
- Ensure borrowers understand the detail of their particular loan.
- Carry out a thorough check on borrowers' creditworthiness before any loan is agreed.
Consumer Minister Edward Davey said;
"The implementation of the Consumer Credit Directive will help strengthen a culture of responsible lending. With new legal rights for consumers and greater responsibility for lenders, consumers will be better able to take charge of their money.
"But this is just one part of the story. Looking ahead, we want to consider other ways to empower consumers, creating the right environment to strengthen their choices and giving business the room to innovate in response.
"Consumers should be able to help themselves, provided they have the right help and information to do so. We want to do more to promote these options as well as continue to regulate as a last resort where necessary to provide a safety net for the most vulnerable."