Consumers who buy second-hand cars are at risk of unwittingly inheriting debts taken out by the previous owner that could end up with their vehicle being seized, Citizens Advice is warning.
The charity said one in five people who reported a problem to it about logbook loans ended up having their car repossessed - despite not being the one who borrowed the money.
Someone taking out a logbook loan puts up their car as security. These loans have been compared with using a pawnbroker, in that full ownership of the car is retained until the loan has been paid off.
Unlike handing over items to a pawnbroker, someone taking out a logbook loan can carry on driving their car, as long as they keep up their repayments.
But Citizens Advice warned someone who buys a car which is still the subject of an outstanding logbook loan taken out by a previous owner could end up being chased for the debt - leaving them with the choice of making the repayments or having their vehicle repossessed.
It fears that the risk of this happening is growing, with an estimated 60,000 logbook loans set to be taken out this year, marking a 61% increase on 2011.
Analysis by the charity of more than 250 logbook loan cases reported to it in recent years showed that one fifth of people had their car seized despite not being the original borrower.
Citizens Advice said that without a change in the law, increasing numbers of innocent second-hand car buyers could have their vehicle taken from them because of an outstanding logbook loan from a previous owner.
According to recent research by the Financial Conduct Authority (FCA), the average size of a logbook loan is £1,000 and it can be as high as £50,000.
The FCA, which recently took over regulation of the consumer credit market, warned firms offering logbook loans earlier this month that it will put them out of action if they do not ''dramatically'' improve their standards.
It found evidence of poor behaviour including little or no affordability checks being carried out and some loan applicants being encouraged to manipulate details of their income.
In one case seen by Citizens Advice, a man spent £1,100 on a car and a few weeks later he received a letter from a logbook loans company saying he owed £637.
Despite contacting the loan firm to explain the car had be sold to him and providing the loan firm with the seller's address, someone still turned up to take the car away. Worried he would lose his car and not have a way to get to work, he borrowed money in order to pay the loan off.
The charity said drivers can carry out checks to see if there is a loan attached to a car before they buy it, but not all loans will show up and often there is a cost for making this type of search.
Citizens Advice wants the law to be changed so that logbook lenders cannot repossess someone's car if they are not the original borrower, as well as giving more protection to borrowers to make sure the lender treats them fairly.
Citizens Advice chief executive Gillian Guy said: "Innocent drivers should not have to bear the burden of someone else's debt.
"Some motorists have been so desperate to keep the vehicle that they've paid off the previous owner's loan."