Anyone know anything about consumer credit licenses?

[cashmax]

Wondering if anyone had any input into this. We are in the process of setting up a business that allows short term liquidation of vehicle assets. In other words you have a Ferrari and require a short term bridging loan then you have a number of options - logbook loan or pawn the car. Both of these are in effect a loan.

We are proposing a slightly different solution in that we acquire the car in a straightforward sale, keys, paperwork & vehicle comes with us or in some cases remains in storage, with an agreement that the vehicle will be offered back to the vendor within a specific time-frame and a specific price.

The question I have is does anyone know of this business would require a CCL, I would have thought not, because no credit is being offered, but wondered if it might be viewed differently?

[anonymous-user]

cashmax said:

We are proposing a slightly different solution in that we acquire the car in a straightforward sale, keys, paperwork & vehicle comes with us or in some cases remains in storage, with an agreement that the vehicle will be offered back to the vendor within a specific time-frame and a specific price.

I've no reason to disagree with your analysis.

However, I can't see the business getting off the ground - because the process will add an additional 2x "former keepers" on the V5. Additional keepers are likely to have a negative impact on value of the car and/or the owner may feel embarrassed having to explain to future buyers why they needed to "pawn" the car.

Also, if you wrongly sell the customer's car, what's the customer's remedy? He can't get his car back. He's left trying to sue on the basis that it'll cost him more to buy a similar car than the pre-agreed contract price to re-buy his own car. He'd have trouble quantifying/proving his loss.

By the way, if you've got possession of the paperwork and the vehicle I can't see any material advantage in taking ownership of the car. You've already got everything you need and there would be a clear loan agreement saying what the customer needs to pay to get their car back.

[Camelot1971]

https://www.fca.org.uk/firms/consumer-credit is a good start. It's pretty easy to navigate the site.

[cashmax]

rockin said:

cashmax said:

We are proposing a slightly different solution in that we acquire the car in a straightforward sale, keys, paperwork & vehicle comes with us or in some cases remains in storage, with an agreement that the vehicle will be offered back to the vendor within a specific time-frame and a specific price.

I've no reason to disagree with your analysis.

However, I can't see the business getting off the ground - because the process will add an additional 2x "former keepers" on the V5. Additional keepers are likely to have a negative impact on value of the car and/or the owner may feel embarrassed having to explain to future buyers why they needed to "pawn" the car.

Also, if you wrongly sell the customer's car, what's the customer's remedy? He can't get his car back. He's left trying to sue on the basis that it'll cost him more to buy a similar car than the pre-agreed contract price to re-buy his own car. He'd have trouble quantifying/proving his loss.

By the way, if you've got possession of the paperwork and the vehicle I can't see any material advantage in taking ownership of the car. You've already got everything you need and there would be a clear loan agreement saying what the customer needs to pay to get their car back.

Thanks for the feedback. As you correctly say, adding owners to the V5 would be a bad thing. Fortunately there is little or no requirement to do that. We could of course register the vehicle with HPI if we wanted to be sure of the security. But we wanted to avoid loan agreements in favour of purchase agreements. Of course if the vendor decided he didn't want the car back, it would be sold to us as a trader and then re-sold either to trade with no V5 owner implications or in some cases retailed, which like any other sale would add the new owner.

I am partnered with a trader of 20 years who supplies exotics and others trade to trade only, he also has a logistics business, both are ideal for this venture. We have done a couple of these already in the last few weeks, the last one of which was a car that we bought for £270k that should show a £10K return in the next few days. Which is why I am pondering the market further.

I hadn't given thought to the protection of the vendor since it hasn't come up so far in our deals/discussions, but it's a valid concern we will need to give some thought to.