Log Book Loans Horror Stories

Tirian

Gorgeous_George wrote: »

Perhaps not all borrowers want to be protected from themselves.

I'm sure not. And perhaps not all boy-racers want to be protected from themselves either - but we still have, and enforce, a 70mph speed limit.

Gorgeous_George

Tirian wrote: »

I'm sure not. And perhaps not all boy-racers want to be protected from themselves either - but we still have, and enforce, a 70mph speed limit.

If that is the best you can do then I fear you may have lost the argument.

As well as banning logbook loans I hope that the Government will ban people from taking mortgages without first proving that they fully understand the terms and conditions.

I'm not overly familiar with logbook loans myself but, surely, ruling them out should also see the end of pawnbrokers.

GG

RobertoMoir

rog2 wrote: »

It is certainly no coincidence that these 'companies' flourish when mainstream credit is restricted.

That's true. Vultures love carrion.

RobertoMoir

Gorgeous_George wrote: »

If that is the best you can do then I fear you may have lost the argument.

As well as banning logbook loans I hope that the Government will ban people from taking mortgages without first proving that they fully understand the terms and conditions.

Well this comes back to what I've said all along - I know it would be difficult to implement but I strongly believe that if someone is unable to understand the terms and consequences of the bit of paper they are signing they shouldn't be allowed to sign it.

rog2

Gorgeous_George wrote: »

I hope that the Government will ban people from taking mortgages without first proving that they fully understand the terms and conditions.

The mortgage market is, in fairness, already undergoing major change - much of it from within - due to the current economic situation, to which, I hasten to add, they (mortgage lenders) were amongst the major contributors. The end of 'self certified' mortgage lending is to all intents and purposes, already with us, and the major mortgage lenders are falling over themselves to prove that they are acting responsibly in relation to lending.

'Pawnbroking' can be a reasonable alternative source of short term finance and the industry is already regulated under the terms of the Consumer Credit Act, 1974 : https://www.thenpa.com/procedural_pawnbroking_knowledge.asp

Of course, a prospective client is only likely to be able to 'borrow' a fraction of the actual value of any goods he/she wishes to 'pawn', but it can be argued that this gives the debtor more incentive to pay back the loan within the agreed period.

Gorgeous_George

I'll work out why pawnbroking is different to a logbook loan when I have more time.

Thanks

GG

Apples2

So let's assume our Brave New World arrives where everything is transparent, everything is talked through with the prospective lender in an open and honest environment.

Everything crystal clear.....

The bulk (fair assumption) of those applicants will fail the criteria. They either won't qualify under the terms of lending (affordability etc), or will see enough sense to know it isn't for them.

The need for the money is still there, for any number of reasons people will still NEED the money. Not always for selfish reasons, it may be perfectly justifiable.

How are they going to get it??

In the new days of responsible lending, no company in it's right mind would lend to someone who has never repaid any debt in the past. Nobody can force a company to lend to people in that position with such a high risk of loss.

I'm completely against the limitation of choice.

Having said that I would hope I never find myself in a position to have to use them... but if my child needed an op overseas and the NHS wouldn't pay... I would happily sacrifice my car as security on a loan so I can make it happen.

rog2

Apples2 wrote: »

I'm completely against the limitation of choice.

It's not about 'limiting choice' it's about making sure that the 'choices' are fair.

In my opinion, the disappearance of those whose sole interest is to cream profit out of the misfortune of often vulnerable debtors will make this marketplace more attractive to mainstream lenders, many of whom have hitherto deliberately avoided it because of the presence of these predators.

Your example of 'using' such a company to fund a child's operation is hardly typical of the reason that most people find themselves having to use such companies.

Apples2

rog2 wrote: »

Your example of 'using' such a company to fund a child's operation is hardly typical of the reason that most people find themselves having to use such companies.

Agreed, but I expect the typical reason is to keep up with the Jones' but I didn't want to use that as it adds weight to the "close them all down" pov.

My point was that there ARE genuine reasons out there.

rog2

Apples2 wrote: »

Agreed, but I expect the typical reason is to keep up with the Jones' .

Whilst there will, of course, always be 'genuine reasons' for people to need a loan, often in a hurry, I doubt very much that the principle reason that people use companies such as 'Log Book Loan' or even 'Pay Day Loan' companies is to 'keep up with the Jones'.'
It is more likely that this type of company will target those who are 'down on their uppers' having been refused mainstream credit. A look through the DFW forum, on this site, will show any 'doubting Thomases', amongst us, exactly how these people operate.
Some are even referred to such companies by Debt Collection Agencies in order to pay off existing debts, which is in direct contradiction to the OFT Guidelines on Debt Collection.
In some cases even those sub prime lenders, such as the Provident, who, unbelievably to many, actually enjoy a certain respectability in this sector, will actually provide the debtor with additional loans to enable them to maintain their payments on existing loans. What might start as a seemingly innocent £200 loan, to replace a broken washing machine for example, can easily send the debtor into a spiral of debt amounting to thousands of pounds, even resulting in bankruptcy.

I am all for responsible lending - in the example that you give, I believe it would be irresponsible for mainstream lenders to ignore such a request without, at least, pointing you in the direction of 'responsible' sub prime lenders, credit unions or the Social Fund.

Nobody is saying that the 'increased risk' of sub prime lending should not attract some additional cost to the borrower, but that 'cost' should be affordable rather than extortionate.

If the outlawing of current practice, by these companies, causes them to go out of business then that is fine by me.

Equally, though, if it means that they are forced to re-evaluate their operating procedures and find that they can not only make a reasonable profit by acting responsibly, but also earn their place as responsible members of the Financial Industry, then that's fine by me, too.