What is a Bill of Sale?

The bill of sale serves as the proof of the legitimacy of the transaction between the seller and the buyer. It provides information on the purchase, and that it testifies to the buyer’s entitlement and possession to the said property. For logbook loans, lenders require borrowers to accomplish the bill of sale to qualify for the loan, and only once the bill is signed will the borrower receive the money. A sample bill of sale may state the following:

  • The amount of payment the vehicle was purchased at
  • The names of both the buyer (lending company) and the seller (borrower)
  • The name and model of the vehicle
  • The agreements between the two parties regarding the ownership of the vehicle

The Bill of sales provides assurance to logbook loan lenders in the event that borrowers are not able to pay back the loan as agreed. In caseswhere a borrower is unable to repay the debt, then the lender may use the bill of sales to repossess and resell the car to get back the amount that was lent. To the lending companies’ advantage, the Bill of sales does not need a court order to be executed.

So long as the bill of sales is still valid, the borrower can still use the carprovided that he is able to settle his repayments on a timely manner. Once the loan is completely paid, the bill of sale is then cancelled and the borrower again assumes ownership of the car.

In reality, logbook loan lenders tend to look at repossession as the last option because of the costs incurred in hiring bailiffs, as well as the effort it requires to undergo legal procedures. The lenders are in fact, more interested in receiving back the full repayment of the loan due to the high interest rates as it is more convenient than repossessing the borrower’s car.