Discretionary Commission Arrangements - Complaints and Refunds
Car Cash Point Ltd was founded in 2010 by Paul Hilburn (he has since left and founded two other Logbook Loan companies) and is based in North London. It is now one of the UK’s major Logbook Lenders, offering short term secured finance by way of Logbook or V5 loans. They lend from between £500 and £50,000, offer weekly or monthly repayments, with loan terms starting from one year to a maximum of five.
A logbook loan is a form of secured lending; if you own a car, motorbike, or van, you can release the equity (typically you can borrow up to 70% of the trade value) in the form of a loan. The lender will usually only consider your vehicle as security for a loan if it is free of finance. So, your car, van, etc., acts as security against the loan until it is fully repaid. The primary benefit of a logbook loan is that you continue to use the vehicle for the term of the loan, even though ownership of the vehicle has been transferred to the logbook lender. Despite this being a secured loan, Logbook Loans are generally very expensive (see examples below) and not only that, but they do also carry the risk of you losing the vehicle to the lender if repayments are not made on time or in full!
The application process for a Logbook Loan is pretty similar to that of a personal loan, or unsecured loan, in that it is a loan contract between you the borrower, and the lender. In the case of Car Cash Point, once you have applied online or over the phone and received a quote you are happy with, you then have to visit one of their offices (or pay to have a visit) to complete the loan. You sign a loan credit agreement, and also a Bill of Sale. This element of the loan is highly important as in England, Wales, and Northern Ireland, a Bill of Sale is recognised by law as a certificate of the transfer of property to another party, in this case, the lender. So, once you have signed the loan agreement, technically you no longer own your vehicle, you just have physical possession. This means that you cannot now sell the vehicle until the entire loan is paid off, as the loan company has legal possession.
So, we know that Car Cash Point will lend between £500 and £50,000, but how much will they charge for the privilege of borrowing from them? Their website has, in bold, “Representative 230.7% APR” – but what does this really mean to the borrower? If we look at their representative example, we can see that if we were to borrow £1,000 over 3 years (36 months) with a (fixed) flat rate of 96% per annum, made 156 weekly payments of £24.87 (that seems a very easily manageable amount, doesn’t it?), that the total we would pay would be £3,880.00. Therefore, to borrow £1,000, not only would we pay back that principal amount, but on top of that, we would have to pay £2,880.00! It is not rocket science to work out that Logbook Loans are an extremely lucrative business model. To add insult to injury, if repayments are not made in full or on time, there is every chance that our vehicle could be repossessed too!
Browsing Car Cash Point’s website, I was surprised to see that they have a “Best Rate Promise” – they claim that if you can find a lower price with a different lender, then they will undercut that price by 10% - then I remembered the frankly extortionate interest rates and realised that of course they are going to try everything to get more borrowers. And that’s not the only incentive they offer either. Most Logbook Loan lender clearly state that they will not consider you for a loan if your vehicle has outstanding finance – not so Car Cash Point. No siree, they will even consider (assuming other criteria is met) lending to you, as long as you clear the finance prior to completing the loan, or if the existing finance is “cleared from the proceeds of the new loan”. How very inclusive of them I say!
Of course Car Cash Point are not the only Logbook Loan company who are charging these exorbitant amounts; I wrote an article on Varooma a few months ago, and quoted (from their website) their representative example (which incidentally was more outrageous than Car Cash Point’s) – they were charging a (fixed) interest rate of 120% per annum, with a representative 442.66 APR, so a loan of £1,300 over 18 months meant a sum of £2,340 to pay on top of the principle amount. Indeed, Car Cash Point do currently use Varooma on their website as an example of a more expensive Logbook Loan company – surprising given that 1) Varooma have gone into administration and 2) Car Cash Point had their wrists slapped by the ASA (Advertising Standards Authority) when they were found to have breached the CAP Code stating that marketing communications must not discredit or denigrate another product or marketer. In essence, Car Cash Point featured a testimonial on their “Reviews” page, from someone denigrating Varooma’s “extortionate fees and charges” while also waxing lyrical about the support they got from Car Cash Point when they wanted to switch loans from Varooma to Car Cash Point.
Like many other Logbook Loan companies, Car Cash Point have come under fire for lending when it would have been obvious if there had been sufficient in-depth checks that the borrower couldn’t afford the loan. One reviewer (Google reviews) stated that they were shocked that Car Cash Point lent to someone who already had debts of over £60,000, and that they had not completed comprehensive checks. Could it be that credit checking is not a high priority because the lender will have a vehicle as collateral? In any case, affordability is the number one complaint with this lender, and many others, and plenty of customers have recognised that they were mis-sold a loan, and have gone on to make a complaint, and receive a refund and/or compensation.
Other complaints are that the lender did not make it clear that if the customer did not keep up with repayments, they could ultimately lose their vehicle. Some customers also complained that they had no idea how much interest they would end up paying, as the lender went through all the details too quickly, and only emphasised the weekly or monthly payments that seemed manageable.
A very common criticism that appears repeatedly on reviews about Car Cash Point is their questionable practice of offering incentives for reviews, be this in the form of a credit on the account, or a discount. While reviews may well be a good way to let potential customers know about the great service that a company offers, it could be seen as somewhat disingenuous to offer a financial reward to obtain them. Of course, it could be said the reward is for any review, good or bad, but the likelihood is that a new customer will leave a positive review in return for a payment.