My lender has said it'll take my car, because I can't afford to repay my logbook loan

Logbook Loans

Renee had her car taken away by her lender when she fell behind with a payment on her logbook loan. 

What happened

Renee took out a logbook loan. After a few months, Renees health had declined and she was having money trouble. She contacted her lender to let them know about her change in circumstances. Renee then fell behind with a payment on her logbook loan and had her car taken away by the lender.

Renee felt that she shouldn't have been given the loan in the first place and didn't think her lender offered her enough support when she contacted them about her health issues and financial problems, so she complained to the lender. 

The lender said in its final response letter that it hadn’t done anything wrong. It said it carried out an affordability check which included a review of Renee’s credit file. Unhappy with the outcome, Renee decided to bring her complaint to us. 

What we said

We asked the lender for the checks it had carried out before giving Renee the loan. These showed that Renee was having money trouble. The credit file showed five delinquent accounts with a total balance of over £5,000 and five defaults in the preceding 12 months with a total balance of over £1,400. It also looked at some of her bank statements which showed further money troubles including a returned direct debit as Renee didn’t have enough funds to pay.

Renee had filled out an application form which indicated she had enough disposable income to afford repayments. But we said that the other information which the lender had clearly showed that the information she had provided about her outgoings was incomplete. And the reality of the situation was that she was unable to keep up with her financial commitments.

We also looked into how the lender treated her when Renee got in touch about her money troubles. From what we saw from the lender’s account notes it looked like it became aware she was having health and financial difficulties but it did not offer support straight away. Instead of discussing how it might help it took her full payment that month.

We considered the relevant FCA guidance on lending and the particular circumstances of the case. After doing so we didn’t think Renee was in a position to take on further borrowing. And we thought that the lender should have realised that despite the information on the application form which Renee filled out. So we didn’t think it should have given her the loan.

We said it should refund her the interest and charges she paid, and waive those which were outstanding or due in the future. We also told the lender to amend Renee’s credit file, stop any recovery action and treat the car as though Renee has full ownership of it.

We also didn’t think that the lender had treated Renee fairly when she got in touch about her financial troubles. And although Renee didn’t fully engage with the lender later on we felt that it should pay her £100 compensation for not trying to help her at an earlier stage.