Paul Beevers explains why lawyers acting for clients with logbook loans need to act fast
It is surprisingly easy to use a car as security for a secured loan, just like a house. Most lenders call them logbook loans. The loans are usually short term, at least initially, and at higher than average rates of interest: 200%-plus annual percentage rates (APRs) are common. For those who cannot repay their loan the car they have given as security is easily taken from them—and then gone in just five days. Originally, as the name suggests, logbook loans involved leaving the vehicle registration document of the car with the lender, as security for the loan. However, this attempt to create a pawn of the car failed to work, because a vehicle registration document, a V5, is not a document of title—see Joblin v Watkins and Roseveare Motors Ltd [1949] All ER 47 and the statement to that effect on all V5s.
To establish the right to take possession of the car lenders turned to a chattel mortgage known as a security bill of sale.
