An increasing number of second-hand car buyers could have their vehicle snatched from them because of an outstanding logbook loan from the previous owner.
The warning comes today from Citizens Advice after its research revealed that almost two-thirds of used car buyers don't check whether the motor has an outstanding loan attached to it.
One in five people who reported a problem to Citizens Advice about logbook loans earlier this year had had their car repossessed despite not being the original borrower.
One man reported spending £1,100 on a second-hand car but then receiving a letter from a logbook loans company saying he owed £637.
Despite explaining the situation to the loan firm, someone still turned up to take the car away. To resolve things he ended up borrowing money in order to pay off the other person’s loan.
"Innocent drivers should not have to bear the burden of someone else’s debt," said Citizens Advice chief executive Gillian Guy. “It is basically legalised theft that logbook lenders can take cars from people who are not the borrower."
The charity says the law must be changed so that logbook lenders cannot repossess someone’s car if they are not the original borrower.
People who take out logbook loans also need better protections to make lenders treat them fairly, said Ms Guy.
Analysis from the charity also discovered the number of logbook loans taken out this year could reach 60,000; a rise of 61 per cent on 2011.
“Logbook loans do not just present a problem for car buyers – borrowers themselves are being exploited," Ms Guy said. "The industry is rife with irresponsible lending and some people are signing up to logbook loans not knowing the full implications because the outdated language wasn’t clear."
After pressure from debt charities, the Government has asked the Law Commission to take a look at logbook loan rules.