Repossessions are unfortunately common in the logbook loan industry because customers don’t always stick to their payments. Lenders then have to instruct a repossession company and pay for that service.
These are all extra costs for the lender which they could do without. Whenever the media talk about logbook loans they often seem to make out that lenders love to repossess vehicles and they can’t wait to do it. A good logbook loan company will give customers plenty of time to make payments that are overdue.
In many cases lenders will allow customers to go into a payment plan with reduced payments or payment breaks, so they can pay back what they owe. If the first thing lenders did was to repossess every car because of a late payment, they wouldn’t be able to cover their costs.
The media love big stories
Some of the stories that make it to the media are the worst case scenarios, generally when someone has bought a car not knowing it had a logbook loan against it. The customer should have carried out an HPI check on the car before they bought it, to check if it was clear of finance. Of course the person who sold the car on knowing there was a loan attached to it is very much to blame too, but unfortunately the lender needs to recover their costs. Good lenders will generally come to an agreement with the new owner in regards to the amount that can be paid to keep the car.
Unfortunately repossession is a necessary evil of the industry and it doesn’t just happen with vehicles. Bailiffs repossess peoples belongings and houses when they can’t pay other types of loan. Mortgages companies do this to people’s homes, yet the industry doesn’t have as bad a reputation as lending against vehicles. Lenders in the past may have gone too far, but they are generally on rare exceptions.
Lenders do need to repossess, but they don’t like to, and do it to cover their costs.