Bill of sale
Bill of sale is a legal document that is signed by the seller and is given to the buyer in order to prove the legitimacy of the transaction. The document states that on a certain date and place for a specified sum of money a specific item was sold by the seller to the buyer and that the buyer was entitled to do so by having lawful possession of the item. Logbook loan companies require people to sign the bill of sale in order to qualify for the loan and only after the bill is signed the person can get the money. A simple example of the bill of sales for the logbook company could look like this: “For the sum of £15 000 I sell to “Logbook Dealers” full ownership of a green Mercedes Benz car that has a registration number XXX. John Silverstone (signature)”.
Bill of sales is an asset that is protecting logbook loan companies from borrowers that do not return loan on time. If the borrower fails to repay his debt then the logbook lender can use bill of sales to repossess and then resell the car in order to get the money back. The biggest advantage of the bill of sale for the logbook companies is that they do not need to get a separate court order for the repossession of the car. If the bill of sales had not been signed a seller could sell the car once again to the third party without telling that the car already belongs to the logbook company. Some people still manage to sell their car with the bill of sales attached to unscrupulous car dealers and this activity is subject to legal charges or even jail for both parties.
While the bill of sale stays in force the seller can use the car for his own needs as long as he is able to make repayments on time. After the loan is paid completely the bill of sale is cancelled and the seller repossesses full ownership of his car.
In practice logbook companies use bill of sale to repossess the car as the last option because they incur high costs associated with hiring bailiffs and going through all legal procedures. Because of very high annual percentage rate logbook lenders are more interested in getting the loan and the interests hassle free.
It is very important to check if the bill of sale signed with the logbook loan company complies with the Bill of Sale Act (1878) and Bill of Sale Amendment Act (1882). It is better to ask a legal advisor to evaluate the bill of sale before signing it. Those bill of sale that do not comply with the law fall under the category of extortionate credit bargains are subject to allegations. However if the document is already signed and the credit company is trying to repossess the car using illegal bill of sale the borrower could claim damages or seek court order to cancel the bill of sale.