Can A Logbook Loan Make You A Better Financial Manager?

Many people believe that going for a logbook loan is the lowest point that they can sink in their lives. Experts advise people to only use logbook loans as the option of last resort. However, the fast growth of the numbers taking logbook loans in the UK is worrying. Even with the high APR (annual percentage rate), extensive risks, and dangers of having the car recovered, can anything good come from the logbook loans? There is a silver lining in this precarious situation. Here is a closer look at Robert Johansen situation that made him emerge a better financial manager.

How Robert ended up with very poor credit score and sought a logbook loan

During the summer of 2015, Robert Johansen took a logbook loan because his credit score was very poor. The poor credit rating had come about from overspending on his credit card and defaulting two bank loans when his daughter fell ill. As a college teacher, all his resources were directed to handling his daughter which meant defaulting on the mortgage and even personal utility bills. Things ran from bad to worse within six months.

With only his car left as the most valuable asset, Robert saw no other alternative but to get a logbook loan. However, he sought advice from a financial expert early enough after borrowing the logbook loan. This is what made Robert emerge as a better person, create new streams of revenue, and march to financial freedom. Here are some great things that can come from a logbook loan.

Learning how to budget and applying the skills in other areas of personal finance

Perhaps the most important thing that one can learn from logbook loans is budgeting. Because there are other loans, credits, and personal expenses to be met, one has to learn about budgeting. If you seek assistance from a financial expert, he will assist you to classify different expenses and direct the resources to those that are more important. When these skills are applied in other areas of personal life, you will emerge from the logbook loan and other debts a better person.

Appreciating the role of experts when handling subjects from areas outside your jurisdiction

If you are not an expert in a specific field of specialization, the best thing is seeking assistance from experts in that area. This philosophy comes out very well when one is handling a logbook loan. Though you might be in nursing, hospitality, education, or engineering among other areas, it becomes easy to appreciate that finances is a different field altogether.

In Robert’s situation, the financial expert came in handy to help him appreciate the importance of good financial planning. He was able to acknowledge the sources of finances and how to spread the resources to cover all the expenses while meeting the loan obligations. You should never make the mistake of allocating the entire salary to repaying the loan only without catering for all personal expenses such as rent and transport costs.

Acknowledging the challenges that lay ahead in quest reach financial freedom

The main road to financial freedom is marred with numerous challenges. However, you can easily overcome them after successfully addressing logbook loans. Robert understood the dangers that come with poor credit score. This appreciation makes people work harder to ensure they are in good terms with lending institutions that have lower rates.

Robert further appreciated the importance of having several streams of revenue. If one fails, there is always a fall back plan to prevent you rushing to high interest and high-risk sources of funds. Think of running a blog, opening a business for other members of the family, and working on a part-time basis after work.

 

Excellent tips to help you repay your loan in time

Acquiring a logbook could be really easy. Paying it on the other hand is something entirely different. Sometimes, it’s better not to take a loan at all than failing to pay one. Well, you already know the consequence of not meeting the stipulated repayment deadline. You will definitely lose your car and probably face more money challenges. That is why you need to do everything in your power to pay back your loan in time. This easier said than done though. Thankfully, you are in the right place. Below are some great tips to help you in repaying your loan before the due date.

Make use of your bonuses

In order to meet your repayment deadline, you are going to have to put your income gains into good use. Instead of buying that new gadget, why don’t you redirect your extra money towards paying your loan? In case you do a contract and happen to get a generous tip, don’t just spend it all at once. At least dedicate a part of it to your loan. Do this for every bonus you get from now on as you continue with your monthly instalments. Although it might seem difficult to let go of that extra hard earned cash sometimes, doing this will help shorten your repayment period. Try it and see for yourself!

Refinance your loan

Another great way of repaying your logbook loan is by refinancing it. There is no better way of clearing outstanding debt than by using this method. Refinancing involves taking another loan in order to pay for the first loan. The new loan now becomes what you need to pay off and is usually subject to a lower interest rate. Therefore, you eventually end up completing your logbook loan instalments and begin concentrating on another loan.

Despite all that, you need to be really careful with this method. It is usually better to refinance during the early or middle stages of the repayment period so that you can pay an overall cheaper amount in the long run. So, remember to research on other available loans even after you have taken a logbook loan.

Lower your living standards

Apart from refinancing your loan, you should also consider lowering your living standards in order to repay your loan in time. For instance, you could move to a more affordable house, especially if the loan is really taking a toll on your finances. Just think about how much money you can save on the rent. All of that can be directed to clearing your loan and free you from debt.

Moreover, you could also try to adjust your lifestyle to a lower income. Get rid of any subscriptions that you know you’ll survive without, especially online. Additionally, consider public means of transport in order to save on fuel. By adjusting your lifestyle to a lower budget, you should be able to save enough money to pay your loan in time.

Redistribute your payment

Have you ever thought of distributing your loan payment into more instalments? Note that, the more instalments you have, the less the amount you will have to pay for each. Therefore, try to break down your payment as much as possible. You could decide to make weekly payments for example. By doing so, you will have the responsibility of hassling for only a quarter of the monthly instalment you had previously chosen to pay earlier on. It doesn’t have to be weekly only. It could also be bi-weekly or tri-weekly. Just choose what you are most comfortable with. Redistribute your payment in such a way that you can pay your instalments with minimum stress.

 

Five Things That Can Make a Logbook Loan Sink You Deeper Into Financial Trouble

Once you decide to go for a logbook loan, it is important to appreciate the risks that lay ahead. In many cases, it is considered the credit of last resort because most financial institutions have declined loan applications. Like financial experts point, the logbook loan should only be used with a lot of caution. In this post, we look at five key things that can make you sink deeper into financial trouble after taking a logbook loan.

Prioritizing payment of other less risky loans while giving less focus to the logbook loan

The moment the lender approves your logbook loan, it is important to appreciate that a lot of dangers lay ahead. Because you have already given away the car documents, the risk of losing it becomes real. Failing to prioritize the logbook loan when repaying other bills can only worsen your present credit situation. While other debts need to be cleared as fast as possible, those that do not come with a lot of threats can wait until the riskier logbook loan is cleared. For example, the student loan can wait for a couple of months because it does not attract any interest and no collateral is attached to it.

Taking the maximum that the lender has to offer as opposed to what you need

For many people who have been declined loans by banks, a chance to borrow looks God sent. However, this is a trap that makes most people to nosedive into the sea of trouble within no time. Even if the lender is willing to offer £30,000, but you only need £2,000, consider going for what is needed only.

A bigger logbook loan means that you will repay for a longer time with higher interest rate. Repaying a lot of cash every month for a long time is bound to cause fatigue and raise the chances of defaulting.

Hiding from the lender when meeting monthly payment becomes difficult

If you realize that the sources of revenue are having issues and meeting the monthly repayment is becoming difficult, running away will only worsen the situation. The loan will accrue a lot of interest, and the lender will start looking for the car to recover the money. Instead of running away, it is advisable to visit the lender and tell him what you are going through. Though some additional interest might be incurred, some good lenders will even allow you to readjust the repayment amount for a few months until your issues are resolved.

Failing to relook at personal spending and reworking on the budget

Financial experts in the UK and banking institutions have found that many people get into trouble with personal finance because of poor budgeting. This problem can make things worse by drawing you deeper into the turmoil of debt.

After getting a logbook loan, it is important to relook at your budget from a different angle to help release some cash. If you find it difficult to achieve this alone, make sure to seek help from a financial expert. A good budget will help you to look at personal finances from a long-term perspective.

Looking at the logbook loan in isolation

Personal finance is not about the logbook loan only. To reach financial freedom, it is important to have a bigger picture and factor the loan in the budget. If you look at the logbook loan in isolation, the chances of sliding back into the situation you are in are very high. When drawing a financial strategy, experts advise clients to look beyond the logbook loan and other credits. For example, the austerity measures you adopt should be implemented to help clear the loan, build an emergency fund, finance personal businesses, and create new lines of revenue.

How to Limit the Use of Your Credit Card When Grocery Shopping

One of the biggest – and perhaps, the most important – expenses that people make is food. When planning a budget, food is almost always one of the items that you don’t want to leave out of your list. People need to eat, there’s no changing that. What you can change, though, is the way you go about procuring the most basic of all human necessities.

Here are some of the ways you can rely on your credit card less often when doing your groceries.

  1. Create a meal plan. Planning is the key to success, and that applies to the food you eat. Don’t go about putting things in your shopping cart and making decisions about what delicious meal to cook on the fly. Planning your meals is not only a potentially healthy habit, but it also keeps you from spending too much unnecessarily. Knowing what you’ll have for breakfast, lunch, or dinner allows you to plan your budget and buy only the ingredients that you need, and no more. Then bring just enough cash with you to the grocery store and leave your credit cards at home.
  2. Shop less. If you don’t go to the grocery store, you don’t risk being tempted into using your credit card. Make sure to get everything you need from the grocery store for the next few weeks or so in one visit and avoid having to make a return trip. Coming back to the grocery store for something you forgot to buy will almost certainly end up with you coming home with more things you don’t really need just so you can fill up your shopping cart.
  3. Only bring cash. At the risk of stating the obvious, bringing just enough cash to the grocery store for your needs keeps you from having to depend on your credit cards while also preventing impulse buying. Following your meal plan should give you an idea about just how much money you need to take with you for groceries, so that you don’t have to use your credit card.
  4. Take advantage of sale items. Be sure to stock up on all the items you need whenever they go on sale. Commodities don’t go on sale all the time, so when they do you need to be sure you’re ready to take full advantage. But consider the product’s shelf life too, otherwise you’ll end up with boxes of breakfast cereal that you can’t eat because they’re already past their expiration date.
  5. Buy what you need in bulk. A five-liter container of milk costs more than a one-liter carton. But, if you go through five liters of milk in a week, getting the larger five-liter container makes more sense than buying five individual one-liter cartons. Bulk buying lets you get the same amount of a product for less money, making it easier for you to use cash instead of your credit card.
  6. Avoid pre-cooked meals. Aside from pre-cooked meals having potentially harmful preservatives and other chemicals, they also cost more than home-cooked meals. While it does take a little more time and effort to cook before you eat, it does save you a lot of money. You won’t need to use your credit card to dine out or to buy instant food.
  7. Store your food properly. Food that has gone bad is money wasted. Make sure that all perishable food items are either consumed or put in proper storage. This extends the food item’s shelf life, and in turn, prevents you from buying more groceries with cash or your credit card.