Purchased Car with Outstanding Logbook Loan. Help!

bljones65

Hi, I've searched through the forums and found a few people have had similar issues to myself. If anyone has any advice about the issue I would be happy to hear from you.

My girlfriend purchased a car back in January 2013 from a garage in Birmingham (we live in Wales). We had a phone call on Thursday from Mobile Money Ltd informing her that they were the rightful owners of the car. They explained that a logbook loan had been taken out on the car by the previous owner (not the garage who have never been listed as the owner on the logbook) and that they were now pursuing the car as the previous owner had defaulted on the repayments.

We purchased the car in "good faith" from the garage and did not expect to be purchasing a vehicle with outstanding finance. We actually did a basic HPI check that revealed no outstanding finance on the car. (We used one of the text messaging services). Having purchased the car in cash she continued to use the car believing to be the rightful owner.

We have since tried to contact the garage by telephone but could not get through which lead us to believe that something wasn't right. We took a trip to Birmingham on Saturday to find that the garage had gone into liquidation and was no longer operating.

There is £2,200 outstanding on the loan with Mobile Money Ltd so we're not prepared to settle given that we have spend £3,000 (cash) on purchasing the car already and almost £500 on repairs with 4 new tyres, etc.

My girlfriend contacted Citizens Advice on Thursday but they didn't really help with anything. I have now spoken with them today and they have referred the matter to my local trading standards office but may take up to 5 days to respond.

I could really do with some help or advice from anyone who knows anything about these companies and how to challenge them.

Many Thanks
bljones65

CKhalvashi

Whether you buy privately or from a motor trader, you are entitled to expect that the car is roadworthy when you buy it, unless you and the seller clearly agree it is to be sold as scrap. You should take note that a car sold with an MOT Certificate does not necessarily mean that it is roadworthy.
You are also entitled to expect the seller to have ‘good title’ to the car. In other words, to be the owner or authorised by the owner to sell it. If you buy a car later found to be stolen, you have no legal right to keep it. You will have to try and get your money back from the seller.
The Consumer Credit Act 1974 gives ‘good title’ to the innocent private purchaser of a car which later turns out to be subject to a claim by a finance company because of a previous, unpaid hire-purchase agreement. This means that the finance company is not entitled to repossess the car from you. Remember, this does not apply to cars which have been stolen, or cars that were subject to a lease or hire agreement.

I would get in touch with Trading standards and maybe citizens advice they will let you know your best course of action from here.

CK

ETA: What year/make/model/engine/trim is it, and how many miles has it got? I've just checked with a colleague, and whilst not 100% guaranteed unless you're in Scotland, the principle applies of how much you paid, compared to what similar models are worth.

bljones65

Thanks for your reply CKhalvashi. I have already passed all the information on to trading standards who are investigating it and are going to get back to me within 5 working days.

The problem I have is that a logbook loan was taken out on the car so i'm unsure as to whether the Consumer Credit Act still applies.

The car is a Suzuki Jimny Node 1.4 and its done 104,000 miles. Its a 54 plate.

~Brock~

CKhalvashi wrote: »

The Consumer Credit Act 1974 gives ‘good title’ to the innocent private purchaser of a car which later turns out to be subject to a claim by a finance company because of a previous, unpaid hire-purchase agreement. This means that the finance company is not entitled to repossess the car from you. Remember, this does not apply to cars which have been stolen, or cars that were subject to a lease or hire agreement.

The Consumer Credit Act is silent on this matter....you are referring to Section 27 of the Hire Purchase Act 1964.

Logbook Loans are usually set up using a Bill of Sale, which gives the lender the right to recover the vehicle regardless of who currently is in possession of it, and outside of both of the above Acts.

The key here is to discover whether the Bill of Sale was set up correctly in the first place as there are some very strict rules regarding timings as they need to be registered at court within a short time of setting up.

bljones65

The logbook loan refered to on the car was set up using a Bill of Sale which as stated by Brock seems to give the lender the right to recover the vehicle regardless of who currently is in possession of it, and outside of both of the above Acts.

My research showed that all the strict time limits have been adhered to. Mobile Money Ltd (MM) logged it with HPI within 24 hours of the agreement taking place. They also had the Bill of Sale stamped by the High Court within the 7 day time limit.

I've done some research and found that S22 of the Consumer Credit Act 1974 may apply.

"S22 is the exception. So when the vehicle was bought by the dealer "in good faith" and he then resold it, good title was obtained by the private buyer and the finance company cannot take it back from them. The private buyer is classed as the first "innocent purchaser".".

Found at honestjohn.co.uk/faq/finance-checks

poppasmurf_bewdley

Just a thought from my usually devious mind.

If this 'Bill of Sale' gives the finance company the power to recover the vehicle, reg number A123ABC, if you purchase a new registration number, say ABC123A, and put it on the vehicle, would they be able to repossess the vehicle with the new number?

It's just a thought.

CKhalvashi

poppasmurf_bewdley wrote: »

Just a thought from my usually devious mind.

If this 'Bill of Sale' gives the finance company the power to recover the vehicle, reg number A123ABC, if you purchase a new registration number, say ABC123A, and put it on the vehicle, would they be able to repossess the vehicle with the new number?

It's just a thought.

Would it be logged as one car, though, through the VIN number?

I've got '6 ***' on my car, however on the logbook (the plate went on the car 2 days after I bought it), it's quite clearly stated that it's the same car as 'OV62 ***', and that the plate has been transferred.

OH's car is the same, showing 'OE13 ***' has become '6 ***'. Both are pre-reg vehicles, and we show as 2nd owner on both, although we've had them in our possession since September 2nd 2012 and March 2nd 2013 (1 day after registration).

It could work, but I think on the basis of the logbook, possibly not, unless it's a brand new, unregistered car, of which the logbook loan wouldn't be available. (I haven't checked the logbooks, but I'm sure this is the case)

CK

Treadmill

Do log book loans show up on an HPI check ?

~Brock~

bljones65 wrote: »

I've done some research and found that S22 of the Consumer Credit Act 1974 may apply.

"S22 is the exception. So when the vehicle was bought by the dealer "in good faith" and he then resold it, good title was obtained by the private buyer and the finance company cannot take it back from them. The private buyer is classed as the first "innocent purchaser".".

Found at honestjohn.co.uk/faq/finance-checks

You appear to refer to s28(4) of the Hire Purchase Act 1964. Schedule 4 of the Consumer Credit Act really just repeats this, and it again only applies to Hire Purchase or Conditional Sale agreements.

CKhalvashi

~Brock~ wrote: »

You appear to refer to s28(4) of the Hire Purchase Act 1964. Schedule 4 of the Consumer Credit Act really just repeats this, and it again only applies to Hire Purchase or Conditional Sale agreements.

Surely a logbook loan is a conditional sale agreement......Or am I clutching at straws for OP here?

CK

bljones65

My understanding is that a Bill of Sale is something completely different from a Hire Purchase or Conditional Sale Agreement however I have reason to believe that the Consumer Credit Act 1974 may still apply but I need to clarify this.