Companies that offer people short term finance through logbook loans are now under more regulation than they have ever been before. The age of the internet made it very easy to apply for a logbook loan, just by logging on to a computer. Just a few clicks and you can receive the money you need on the same day.
However it all became too easy for lenders to make claims about their loans that were not entirely truthful in terms of the costs of taking out a loan and other hidden costs. It got to a stage where organisations such as the Citizens Advice Bureau had so many complaints about lenders that something needed to be done.
The Financial Conduct Authority has stepped in to oversee the short term loans industry, amongst others. They are there to make sure that firms comply with their rules or face not being able to trade. Companies need to be initially vetted by the Authority to check if they are fit to trade and they will then be assessed on a regular basis to make sure that they are conforming to the standards. If they don’t meet these standards the punishments are harsh, they will have to stop trading.
Customers who have suffered the brunt of these bad lending practices will be pleased that regulation has arrived. For them they might feel it is too late but new borrowers will see the benefits.
One of the clearest signs of regulation is the prominent positioning on lenders websites of the costs of taking out a loan, clear representative examples need to be given in an area of the website that is easy to see. The examples cannot just be hidden at the bottom of the page or put in small writing. This is simple but if it is not carried out it will mean problems for the lender.
Most customers are used to shopping online, but the world of short term loans can be slightly different. Often people are on the lookout for a loan because they are desperate for money and if someone offers them a good amount based on the value of their car they will take it. They often think about the consequences later, which is why the industry needs to be all the more careful to vet borrowers when they are applying for loans.
It is no good for the company or the lender if the borrower defaults on payment and so with greater restrictions on who can borrow, problems with repossessions can be avoided in many cases.