A logbookloan is an easy way of getting fast credit against your vehicle. The loans are usually taken by people with poor credit score and cannot secure loans from other conventional institutions such as banks. However, a lot of people in the UK get stuck with the loans when they find it difficult to keep up with the agreed repayment schedule. What do you do when it gets difficult to continue repaying the logbook loan?
Things you must be aware when taking a logbook loan
When you settle for a logbook loan, it is prudent to be cognizant of the numerous risks that come with it.
- The APR (annual percentage rate) is very high. In many instances, this percentage could be as high as 400%.
- When you take the loan, the car ownership is transferred to the lender. You are required to submit the car logbook or V5C vehicle registration certificate to the lender.
- The lender is allowed by law to come and take away the vehicle immediately if you default. However, most of them will not tow it away until you default for several months.
Taking into consideration that your credit score was already poor because of outstanding loans, the chances of finding it difficult and defaulting is very high. With the car being the most valuable asset after the house for many people, seeing it getting towed away and auctioned is painful. However, do not let that happen by using these three solutions.
- Talk to the lender about the problem
Logbook loan companies are out there on a business and, therefore, will go to great lengths to make a profit. It is because of this that they charge very high interest rates on their services. Their interest is not starting lengthy battles with clients, but getting smooth payment to make a profit. If you find it difficult, to meet the agreed schedule, the first stop should be at the lender’s office.
Demonstrate to the lender why you can no longer continue paying the agreed amount and what can be managed on a monthly basis. For example, if you just had a medical problem and you only expect disruption for a few months before springing back to the agreed repayment level; most lenders will reason and agree. However, you must be prepared to incur additional penalties.
- Talk to a financial expert about the problem
When people turn to logbook loans, they rarely think of reaching to the point of getting the vehicle towed away. However, the reality dawns on them when it becomes extremely difficult to service the high-interest loan on a monthly basis. But you can still address the problem by seeking assistance from a financial expert.
Top financial experts have handled similar or even worse situations. So your problem will not be a mountain. One solution recommended to many people is weighing the risks that come with all the loans and focusing on the one that poses bigger loss. For example, if you are servicing credit card loans, insurance loans, and other credits not attached to any collateral; they do not pose a risk of taking away the only family car. Therefore, you will be advised to put more focus on the logbook loan because the car is at a great risk.
- Organize to sell the car and notify the lender
In extreme cases, you might need to reconsider the unfolding problem and work on tackling it head on. Well, take a situation like this. You have a car worth £5000 and have taken a loan of £1500. Now that you have gotten stuck, a good solution might be organizing to sell the car for £5000 and clearing the remaining amount in full. The balance of about £ 3000 could be used to acquire a cheaper and reliable family car. Remember that in such a case, you must involve the lender because he already has the logbook (owns the vehicle temporarily).