The Link between Logbook Loans and Personal Credit Score

If you have a poor credit score, requests for a loan from conventional lenders will be rejected on first sight. You are a great risk and lending any cash to you is considered a great liability. The only place left to get credit is from lenders who do not factor the personal credit score such as logbook loan companies.

While it is true that the main factor that most logbook loan lenders are interested in is the capability to repay, there is a clear link to credit score. In this post, we bring out this link and demonstrate why you should make improving the credit score a priority.

Default can be reported to credit reference bureaus

When people take logbook loans, the likelihood of sinking deeper into financial turmoil is very high. In addition to the common risks such as losing the family car and hefty penalties, the lender can report cases of default to the credit reference bureau. This means that your credit score will become worse.

Because logbook loan companies are legal entities, they can file default reports directly to the credit reference bureau or capture the details in their bank details. In either way, the credit reference bureau will note you and degrade the credit score until the entire loan is cleared.

Logbook loan lenders can assist clients to fix poor credit score

Though your credit score is already poor, the logbook loan dealer can assist to address it. However, many people rarely appreciate this special role of the logbook loan lenders. If you select the logbook loan company carefully, the lender can assist in the following ways;

  • Helping you understand personal credit score and how it works
  • Helping you craft a good financial strategy for clearing loans and marching to financial freedom

Do not simply look at the logbook loan companies as entities out to make the highest possible profits. They also want to create a good image from a clients’ viewpoint. This will make them win more customers. Remember always to engage the lenders early enough before things get out of hand.

Allowing the lender to automatically draw monthly payments can worsen the credit score

One of the methods used by borrowers to prevent forgetting regular monthly loan repayment is allowing the lender to automatically draw from the account. This means that you can stop worrying about the loan because all monthly payments are cleared on time. However, if your salary is late or cash is not enough, the lender can get an overdraft. This will sink you deeper into financial trouble because it is still a form of borrowing.

Logbook loans often make people forget other loans

The risks that come with logbook loans are very many. To avoid them, many people prefer directing as much cash as possible to clear the logbook loan at the expense of other loans. Consequently, the factors that pulled down the credit score remain unattended. This means that by the time the logbook loan is cleared, the credit score will still be poor. Therefore, it will still be impossible to get a loan from the bank. The chances are that you might end up taking another logbook loan.

To sail through a logbook loan effectively and draw more value, it is important to plan appropriately. You need to think about repayment and how to address the damaged poor score. If you find it too much, do not hesitate to seek assistance from a financial expert.

 

4 Great Things That Logbook Loan Lenders Can Do For You

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.

 

How to Win Trust in Your Bank after Taking a Logbook Loan

Many people who turn to logbook loans consider them the option of last resort after other applications are declined by conventional banks. However, logbook loans are only a short-term solution to your financial problems. Within a couple of years, you might require a bigger loan to finance other projects such as real estate operations or even business. Therefore, the faster you get through with the logbook loan, the better. More importantly, you need to start building trust with the bank so that they consider you a less risky party. Here are some useful tips on winning trust from banks.

Ensure to keep the accounts with the preferred bank open

Though the bank is not willing to lend you at the moment because of the risk involved, it does not want to lose you as a client. After improving your credit score and building multiple streams of revenue, the bank will easily resume lending you compared to a new client. However, it is imperative to ensure that the account is active to demonstrate you can sustain loan repayments.

Work hard to improve personal credit score

Your credit score is perhaps the biggest indicator of an individual’s creditworthiness. By improving the credit score, all banks will be ready to approve the loan during the next application. Here are some useful tips for raising your credit score;

  • Check and correct any error in the personal credit report by three credit reference agencies.
  • Ensure to meet your credit obligations especially regular bills on time.
  • Consider debt consolidation loan using home equity to enjoy lower interest rates and make repayment easy
  • Consider borrowing from your own account and building a good repayment history

Craft a workable debt management strategy

Every lending institution wants to see a workable plan that borrowers are using to move on to the next step. As you continue repaying the logbook loan, having a long-term financial plan is very important. Depending on the amount of revenue streaming into your account it will be easy to convince banks you are a reliable borrower and do not present any risk. For example, you can include multiple sources of revenue such as a home baking business, salary, and stock market trading to help clear any loan faster.

Adopt serious austerity measures by changing personal lifestyle

As you apply for the logbook loan, it is important to ponder what exactly resulted in the current precarious situation. Whether it was an emergency or piling bills, the experience should help you emerge wiser. One way of preventing recurrence of such situations is serious austerity measures. For example, you could consider buying a smaller car with better fuel economy or even ride to work every day. Then, some of the freed money can be used to repay the loans and build an emergency fund.

Consider using collateral when borrowing from the bank

Even if a bank is not willing to lend you cash because of poor credit score, good collateral will easily make them reconsider the application. In many cases, banks will consider your loan application for borrowers using home equity or their vehicles. The collateral is a demonstration that you take the loan very serious and can go to great length to prevent the asset from getting auctioned to recover unpaid debts. However, you must be extra careful when attaching your home equity to the loan because it can be sold by the lender if you default.

While taking a logbook loan is considered the lowest moment that a person can sink to because of the risks such as high APR, it is paramount to start rebuilding trust from the current financial institutions. By looking at the situation from a long-term perspective, it will be easy to make banks and other financial institutions your partner because their credit is flexible and attracts lower interest rates.

Five Simple Ways to Improve Your Credit Score after Securing a Logbook Loan

Securing a loan from a bank with bad credit is perhaps the hardest thing that you can ever imagine. Because of poor credit score, most financial institutions will see you as a high-risk party and close your case without even checking any further. However, most logbook loan companies are not interested in your credit score as far as the car is in good condition and demonstrate the capability to repay the loan.

After securing the logbook loan, the focus must shift to building your credit score. Because most of the logbook loans are very risky and come with high-interest rates of up to 400% APR, it is crucial to avoid getting into a similar situation in future. The borrower must start working on improving the credit score immediately. This will make it possible to access credit from banks by the time you are through with the logbook loan. The following are five simple ways to improve your credit score.

Check and correct your credit score with three reference bureaus

The institutions (bureaus) responsible for calculating your credit score are third parties. They have to rely on institutions that deal directly with clients such as banks, mortgage companies, insurance firms, and others that maintain financial records. Because most of these parties are for-profit organizations, submitting your details is rarely on the top of their agendas. Banks concentrate on looking for new clients, building their brands, and raising profits.

In many instances, it is not uncommon to get your credit score misrepresented. Therefore, by getting your credit report with three bureaus, it is easy to point what is missing or misrepresented. If the details of the loan you recently cleared have not been submitted, the credit score would be calculated based on the previous data.  By correcting the details, it is possible to raise the credit score by a significant margin.

Borrow from your own account

Even if banks have declined to lend you, it is still possible to borrow from a personal account. Simply tell the management that you are on a mission to build the credit score, and they will make arrangement to lend you from a personal account. Then, commit to repaying the loan on time and it will be captured as a short loan. All the repayment details will go towards improving your credit score.

Develop a strategy for clearing debts

Now that you have added a new credit, a proper repayment strategy is crucial. It is important to create a plan to cut on costs and start clearing one loan after the other. The best method is starting with the loans that are riskier and most expensive. For example, you can start paying the minimum amounts on all other loans and commit the extra cash to clearing risky credit such as logbook loan.

Pay all your bills on time

While most people think that it is only bank loans that damage credit history, it is important to note that even common bills can pull down the score. From utility bills to credit card bills, you need to settle them on time. You should particularly follow with the credit card company to get a regular report and clear any inconsistencies.

Avoid closing credit cards as a short-term strategy

While the interest rate that accrues from the credit cards is usually very high, a decision to close the card is ill advised. By closing the card, you remove even the good history that helps to improve on your credit score. Indeed, even closing the card will still not work because the bad history will remain. The best thing is reaching the credit card company to draw a repayment plan. You can also set the spending caps to avoid overspending.

 

Stuck With A Logbook Loan? Here Are Three Things You Can Do

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).

Four Most Important Things You Must Know Before Taking a Logbook Loan

A logbook loan is one of the easiest lines of credit. They are processed fast, and your credit score is not a factor like in other financial institutions. However, borrowers have been cautioned to be extra careful when taking logbook loans because of the numerous risks that come with them. In this post, we outline the four most important things that you must know prior to taking a logbook loan.

The difference between APN (Annual Percentage Interest) and other bank rates

Logbook loans attract high-interest rates compared to conventional credit from banks. While common banks offer their credit at interest rates of as low as 5%, most logbook loans have as high as 400% APN. Take an example, of Mobile Money Logbook Company that has an APR of 99.9%. Therefore, a client who borrows £1000 for a period of 18 months will be charged £665.10. The client will, therefore, pay a total of £1665.10 by the end of the repayment period. Having a clear picture of this interest rate will help you to plan appropriately. Note that this is just one company; others might have higher interest rates.

Financial impact for non-repayment

Once you sign the agreement and the loan is released to you, it is prudent to make the monthly payment on time. Because every logbook loan lender has individual rules that govern actions for non-repayment, it is very critical to read through the respective policies. The main financial implications include the following;

  • A harsh penalty could be slapped on you. This will raise the total amount you will pay by close of the repayment period.
  • Because the loan is taken against your car, the lender could come for the vehicle and sell it to recover the money.
  • If the lender sells the car and the amount raised is not enough to clear the loan, the lender will still come after you to recover the balance. You will be sued in a court of law to help recover the balance.

Non-repayment implications on credit score

While logbook loans do not factor your credit score when you are applying, things change in case of non-repayment. Because the logbook firm is a licensed lender, he is allowed by law to provide credit, and his report to the credit reference bureau will further damage your score. Since most repayments are made through banks, they usually include info pointing your details and inability to repay the loan. It is, therefore, very critical to ensure that you make all monthly payments on time.

The flexibility of the lender

The lender you go to for a logbook loan is very important for a smooth repayment session. Many are the times you will get reports of people’s vehicles being towed and getting auctioned because they failed to remit monthly dues. When you select the lender, it is important to get it right on all the particulars of their flexibilities.

Establish whether the lender can renegotiate the deal in the case of financial difficulties: If you had agreed to remit £ 90 every month, but you are finding it difficult, the best lender should agree to renegotiate. For example, the figure can be lowered to about £80.

Find out how fast the lender moves to recover the vehicle if you fail to remit monthly dues: Because you have already surrendered the ownership of the car by taking the loan, the lender is at liberty to come for it any time after defaulting. However, you should borrow from a lender who is not hasty to take the car away. Some will look for you to find out if there are difficulties and work for ways to address the issue.

What to Consider Before Taking out a Loan on Bad Credit

It isn’t always the best solution to a financial crisis, but in desperate times getting approved for a loan even when you have less than ideal credit is the only way out of your predicament. Here are some of the first things to consider before biting the proverbial bullet.

Think of the Repercussions

One of the more obvious consequences of borrowing money on bad credit is the potential for getting even worse credit. This is due to the fact that lenders need to protect themselves and cover the risks of granting loans to people with bad by offering high-interest loans. And if for any reason you default on your payment, then there go your hopes of eventually improving your credit scores.

But that’s not even the end of it. If you somehow come across a low-interest loan offer despite your credit, chances are, there will be plenty of hidden fees on top of your payments. The low interest fees might have just tempted you into signing up for a loan that you didn’t think was going to be so expensive to pay back.

 

 

Look Around

Borrowing options for people who have bad credit are rare, but definitely not non-existent. However, if you are looking into borrowing money on bad credit, you must be able to discern which of these options suit your needs best, as some of them can lead to more financial problems than they’re worth.

For instance, credit card companies will gladly talk to you and lend you money via a cash advance, despite your less than spectacular credit standing. Cash advances are not that difficult to get approval for, but they often come with huge fees and finance charges that can leave you in worse financial shape than before. It is similar to borrowing money to pay for a previous loan; eventually the arrangement becomes increasingly difficult to maintain and manage. Before you know it, you’re credit is ruined.

Whenever possible, and depending on how much money you’re looking to borrow, try to look for alternative borrowing options that won’t impact your credit rating. Examples of these include asking friends and family for a loan, usually with very little to no interest. Not being able to pay them back won’t affect your credit.

 

Think Long Term

If you’re desperate enough to take out a loan while your credit rating is in shambles, at least consider how paying the loan back can help raise your credit scores. Talk to reputable lenders who can accurately report your payments to the different credit bureaus, and help you formulate strategies on how to raise your credit scores. But none of that will matter if you don’t make your loan repayments on time.

Remember What You Need It For

Your situation may be dire enough for you to resort to borrowing money on bad credit, leaving you with very little room to negotiate with lenders. It’s possible that you may have just lost your job, fallen sick, or gotten into an accident. Remember what you need the loan for, then try your best to make your payments on time. Sometimes, it just takes a little bit of sacrifice in order to get you back on your feet. Good luck!

How to Get Rid of Debt for Good

Little debt can be helpful in achieving some of your goals and keeping your credit score in check. However, when it comes to the point when your debts are giving you a hard time coping up with your finances, it’s obviously time to get rid of them for good. Here’s how.

Build Your Emergency Fund

Of the most common reasons why people end up having too much debt in the first place is the absence of emergency fund. If one thing is certain in life, it’s that emergencies do happen. If your car broke down, you got sick, or lost your job, that’s where your emergency fund comes in to save the day. Too bad many people do not anticipate these things, and then resort to debt as a means to tackle their financial emergencies.

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If you’ve already acquired too much debt now and are already struggling, you may argue about paying off your debts first. But what happens when another emergency strikes again? This is why setting up your emergency fund should be prioritised. If you’re cash strapped, you can start little by little. Setting aside even 5% of your income for your emergency fund can go a long way.

List Down All Your Debts From Smallest to Highest

While it may be most logical to get rid of your debts with the highest interest first, famous radio talk show host Dave Ramsey thinks otherwise. He strongly believes that the best way to build momentum is to snowball your debt repayments, in which you start paying off the smallest debt first and pay only the minimum amount to your other creditors. This way, you can add the money previously set aside to pay off the smallest debts to your larger debts. He also argues that people are more likely to commit to debt repayment if they see results quickly, no matter how small.

Reduce Your Monthly Outgoings

Another important point to remember when you’re paying off your debts is to try to spend as minimal as possible, as it will be difficult to set aside money for your debts when you’re not spending below your income.

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Start recording your expenses and see where you spend your cash the most. Categorise your spending into food, transportation, utilities, etc. Set a budget for each category, and use the envelope method if necessary. Once the money in a certain envelope is all spent, spending on that category should be stopped until the next paycheque. It is important to set reasonable amounts for each category to make sure you don’t fall short.

Find Another Source of Income

One of the reasons why people fail miserably at debt reduction is because they simply do not earn enough. While many people may argue that it all depends on proper budgeting, sometimes there simply isn’t enough cash to manage. If, despite all your efforts, you still see yourself struggling paycheque after paycheque, then it’s high time to seek another income source. Whether it’s a second job or some simple side gigs here and there, this can help alleviate some of your financial shortfalls at least until you’ve paid back all of your debts.

Seek Professional Help

Lastly, if all else fails, maybe you simply have to accept that your debt problems have reached to the point that you can no longer manage them by yourself. Do not be ashamed, because a lot of us have dealt with financial troubles from time to time, and it’s not true that your problems are beyond repair. The key here is to acknowledge when professional help is to be called for. Allow the money experts to help you, follow their advice diligently, and then commit not to repeat the same mistakes.