Logbook loans are loans advanced against your vehicle. The owner gives away the ownership of the car to the lender until the entire loan is paid. When compared to conventional loans, logbook credit is very expensive. In fact, people are advised to consider it as the credit option of last resort.
A closer check at most logbook lenders in the UK reveals that they have very high APRs (annual percentage interest). Some charge as high as 400% APR. But this is not the only risk.
- There is a risk of getting the car taken away in the case of default
- The danger of sinking deeper into financial turmoil
- The peril of losing the family car (car is the 2nd most valuable asset after house in many homes)
While these risks are indeed true, you can still enjoy a stress-free repayment period by selecting the best logbook company. Great lenders understand their clients and are willing to go to great lengths to help. Here are four special things that a logbook loan company can do for you.
Adjusting the APR
The interest rates of logbook loan companies are very high. That is true. But it does not mean that they are fixed! Logbook loan companies are in business and will not agree to lose clients because of the interest rates. Talk to them, and you will realize how ready they are to adjust the APR downwards. Here are two common methods of getting your logbook loan APR adjusted downwards.
- When applying for the loan, check for companies that have lower rates and ask the preferred lender for lower rates.
- Put forward a proposal for lower rates. If the lender is giving his loan at 299% APR, put forward an offer of a lower rate such as 270% APR.
Assisting you to avoid defaulting
Defaulting on agreed repayment schedule of the logbook loan can be very expensive. The penalties are too high and could easily skyrocket the total repayable amount to very high amounts. However, logbook loan companies are not interested in penalizing you or even selling the car. Most of them want to strengthen their brands by helping clients to stay on the payment schedule. Here is how the lenders can help you avoid defaulting.
- Automating monthly deductions so that you will never miss on repayment
- Creating a reasonable repayment period (for example, if your salary is late with a week, there is no penalty attached to short inevitable delay).
Anchoring you from falling into financial abyss
Notably, many people go for logbook loans as an option of last resort. But the loan is not a guarantee that things will ease up immediately. In some situations, things have even become worse. But the lender is there to help you from sliding into a financial abyss.
Take a situation where a borrower borrows £3,000 against his car with a total value of £7,500. After paying the loan without delay for three months, he loses a job and does not see any other way to continue making payments. In such a situation, you simply need to talk to the lender, and he will assist you in the following ways;
- You agree that it is no longer possible to continue meeting the monthly remittance. This will help to avoid unnecessary penalties and charges.
- The lender and borrower may agree to sell the car so that the lender gets his cash and you can take the excess.
- Because you already have the car, the lender can task you with the role of getting a buyer. This means that you can negotiate with the highest bidder.
Helping you improve personal finance skills
Many logbook loan dealers are financial experts while others employ top brains to help their clients. The experts will help you to understand the current situation and identify methods of edging towards financial freedom. Talk to your lender for assistance with budgeting, improving credit score, and investment.
While logbook loans have won a very negative tag in the market today, you can still get more and emerge stronger. Remember that everything starts with picking the right logbook lender.