Car Logbook ‘Loan’ as Property Deposit answer to Universal Credit?
I have mentioned this once or twice in the past, but I’m now giving it serious consideration as the roll out of Universal Credit looms.
I’m not looking for alternative suggestions on how to solve the problem, rather just answers as to how this could be achieved.
I’m talking about car logbook loans as a form of deposit. Granted, it’s not common in this industry, but from what I understand when it is done for a monetary loan a bill of sale is produced and the logbook kept by the lender until the loan is repaid, thus it is possible.
Operating in a very poor area of the country and having mastered the Court system for both getting rid of problem tenants as well as claiming money back from homeowner guarantors (which all of my tenants require), with the introduction of Universal Credit locally at the end of this year, I expect an increase in arrears and problems and thus an increase in guarantors being taken to Court.
It would be nice if I had a short, sharp, shock of a method for dealing with smaller arrears and to get my message across that rent must and will be paid. I know there are services offered by Caridon Landlord Solutions, but I’m wondering if logbook loans are possible and what sort of FCA/Credit Licence might be required.
Luke
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Member Since August 2013 - Comments: 883
2:45 PM, 7th July 2017, About 9 years ago
Reply to the comment left by “Ian Narbeth” at “06/07/2017 – 19:06“:
Indeed, Ian.
An AST deposit may only be money. Still in section 213:
“(7) No person may, in connection with a shorthold tenancy, require a deposit which consists of property other than money.”
Member Since March 2015 - Comments: 1969 - Articles: 1
2:51 PM, 7th July 2017, About 9 years ago
Reply to the comment left by “Romain Garcin” at “07/07/2017 – 14:45“:
So is a guarantor considered a deposit? If not, why then would a logbook (also not called upon unless there’s a problem, just as is the case with a guarantor) be considered a deposit?
Member Since July 2013 - Comments: 1998 - Articles: 21
2:51 PM, 7th July 2017, About 9 years ago
Reply to the comment left by “Romain Garcin” at “07/07/2017 – 14:45“:
Thanks Romain, I was pretty sure I had seen that previously but did not spot it yesterday when I hurriedly looked at the section.
Member Since July 2013 - Comments: 1998 - Articles: 21
2:57 PM, 7th July 2017, About 9 years ago
Reply to the comment left by “Luke P” at “07/07/2017 – 14:51“:
No, Luke, a guarantor is not a deposit. The logbook either in itself (or as a proxy for the vehicle) represents something that could be sold. It is a form of security that can be sold by the creditor. A guarantor cannot be sold. Instead, a legal claim is made against him. A guarantee is also a form of security but that is not the point. Deposit and Guarantee are both forms of security but the guarantor is not a deposit.
Member Since March 2015 - Comments: 1969 - Articles: 1
2:58 PM, 7th July 2017, About 9 years ago
Reply to the comment left by “Ian Narbeth” at “07/07/2017 – 14:57“:
Thanks, Ian -that was the piece of the puzzle I was missing.
Member Since June 2015 - Comments: 3
9:10 AM, 9th July 2017, About 9 years ago
If the tenant cannot provide a deposit, but has a suitable guarantor instead there is nothing to protect. It is possible to support the Guarantee by taking a charge over the Guarantor’s vehicle by way of a Chatels mortgage. If the Guarantor is an individual then the mortgage should be registered at the Bill of Sale registry for it to be effective. Rather complex but effective though you have to remember that the vehicle is a depreciating asset and the value of the security reduces each month.