Using the Logbook Loan as a Stepping Stone to Financial Freedom

When you find yourself in the corridors of logbook loan dealers, the chances are that your finances are in big trouble. In many cases, people turn to logbook loans because they have a poor credit score and no bank wants to lend them. They are high-risk clients. However, logbook loans have recently been tagged the “ultimate point before total failure.”

In the UK, more than 50% of people who go for logbook loans end up defaulting. In many cases, the borrowers rarely see all the risks involved. It comes as a surprise to realize that the monthly repayment burden is too much. If you default for a couple of months, the already high-interest rate attracts even more penalties, and everything blows out of proportion. However, things do not always have to go this way.

Financial experts are now pointing that you only need a little effort and the logbook loan will cease to be a threat and turn into a great blessing. That is right; a stepping stone to success. Here is how to use the logbook loan to march to success.

Use the huge debt burden to reorganize personal finances

Your huge debt burden should trigger an instant reflex in personal lifestyle. Now that you cannot access credit from banks or other financial institutions, ensure to redefine personal finances. Look for alternative avenues to raise cash for loan clearance and personal success. Take an example of a fitness expert with a local company. Such a person can start a blog to help people with weight loss, fitness management, or even work on a part-time basis. Though such efforts might only generate limited revenue, it will go a long way in helping to clear the outstanding loan.

Create a perfect plan for getting out of debt and beyond

One thing you must get right when trying to clear a logbook loan and rush to financial freedom is that results can only be possible with a good plan. This means looking at the entire personal finances from a longer and broader perspective. A good plan should ensure that you are servicing the logbook loan on time without forgetting the other obligations. It should also include an emergency kit so that more issues that emerge on the way do not compromise the ability to clear the loan.

Focus on austerity in your lifestyle

To succeed in addressing your financial woes, you must focus on austerity. Though you might not realize it right away, the truth is that there are many areas where you can adjust, make huge savings, and direct the funds to clear the logbook loans. Here are some great examples.

  • Consider carrying packed food as opposed to going to the café every day.
  • Use public means to go to work a few days of the week as opposed to the family car.
  • Purpose to go for holiday twice as opposed to five every year.
  • Change your diet to feature cheaper and more nutritious options.

The final take

The logbook loan you took should not be your source of tribulations. You only need to appreciate that it will not be easy and make some adjustments. Make sure to also focus on austerity, draw a good plan, and keep improving the credit score. Remember that patience is of essence.

 

Three Things That Determine Whether a Logbook Loan Will Become a Debt Burden

Was your loan application from a bank declined because of poor credit score? Many people who get turned down find solace in logbook loans. The logbook loans are provided against your car and can be processed within a very short time. Logbook loan dealers do not factor credit score when issuing loans but only review the applicants’ ability to repay.

Once you decide to take a logbook loan, it is important to understand all the associated risks and how to avoid them. In many cases, borrowers end up defaulting on the loans because they also have other obligations. In this post, we evaluate five crucial things that determine whether a logbook loan will translate into a financial burden.

High annual percentage interest

One of the main characteristics of most logbook loans is that they come with very high-interest rates. Many of the lenders keep the interest as high as 400% which can make you pay the amount borrowed over 4 times. This high-interest rate can easily make the loan a serious burden in the following ways.

  • The high-interest rate makes the amount used to service the loan too high and leaves no cash for other expenses.
  • Because of the high-interest rates, many borrowers are forced to forego a lot of things that bring strain in their lives. However, they can only hold for a short time before starting to default.
  • If you had allowed the logbook loan dealer to withdraw the monthly deductions from the bank, delays in your salary can trigger unnecessary overdrafts and deepen the debt burden.

To address the issue of high APR, it is very important to carefully evaluate the lender and only pick the one with the lowest rate. Besides, you can negotiate to have the APR lowered.

Taking the loan over a very long period

Just like other loans from conventional banks, the rule is that; the longer the repayment period is, the higher the amount a borrower pays. However, there is a more serious problem that could draw you in the sea of debt if the loan logbook loan is repaid over a long period.

Taking into consideration that the interest rate is already very high, commitment to pay over a long period can cause fatigue. For example, though you have addressed the current issue, it does not mean that another one such as medical emergency will not arise a few months down the line. If future issues arise (which is very probable) the risk of default is very high. This will attract serious penalties and could make the lender to recover the car.

To address this problem, it is important to try and limit the repayment period to the shortest period possible.

Borrowing more than one requires

Though the banks have declined to lend you cash, it should not motivate you to take the maximum available amount being offered by alternative creditors. For example, if you wanted to borrow 1000 pounds to address a medical emergency, going for 5000 pounds because the lender is willing will be a grave mistake.

  • There is a risk of improper use of the cash because you had not planned for it.
  • The borrower will also pay more because the interested calculated on a larger amount is bigger.
  • The debt will be repaid over a longer period which can cause fatigue and raise the risk of default.

It is advisable to carefully assess your ability to repay the loan and only borrow what you need. Note that this means a careful evaluation of all areas of personal lifestyle to determine your repayment capability.

 

Three Things That Determine Whether a Logbook Loan Will Become a Debt Burden

Was your loan application from a bank declined because of poor credit score? Many people who get turned down find solace in logbook loans. The logbook loans are provided against your car and can be processed within a very short time. Logbook loan dealers do not factor credit score when issuing loans but only review the applicants’ ability to repay.

Once you decide to take a logbook loan, it is important to understand all the associated risks and how to avoid them. In many cases, borrowers end up defaulting on the loans because they also have other obligations. In this post, we evaluate five crucial things that determine whether a logbook loan will translate into a financial burden.

High annual percentage interest

One of the main characteristics of most logbook loans is that they come with very high-interest rates. Many of the lenders keep the interest as high as 400% which can make you pay the amount borrowed over 4 times. This high-interest rate can easily make the loan a serious burden in the following ways.

  • The high-interest rate makes the amount used to service the loan too high and leaves no cash for other expenses.
  • Because of the high-interest rates, many borrowers are forced to forego a lot of things that bring strain in their lives. However, they can only hold for a short time before starting to default.
  • If you had allowed the logbook loan dealer to withdraw the monthly deductions from the bank, delays in your salary can trigger unnecessary overdrafts and deepen the debt burden.

To address the issue of high APR, it is very important to carefully evaluate the lender and only pick the one with the lowest rate. Besides, you can negotiate to have the APR lowered.

Taking the loan over a very long period

Just like other loans from conventional banks, the rule is that; the longer the repayment period is, the higher the amount a borrower pays. However, there is a more serious problem that could draw you in the sea of debt if the logbook loan is repaid over a long period.

Taking into consideration that the interest rate is already very high, commitment to pay over a long period can cause fatigue. For example, though you have addressed the current issue, it does not mean that another one such as medical emergency will not arise a few months down the line. If future issues arise (which is very probable) the risk of default is very high. This will attract serious penalties and could make the lender to recover the car.

To address this problem, it is important to try and limit the repayment period to the shortest period possible.

Borrowing more than one requires

Though the banks have declined to lend you cash, it should not motivate you to take the maximum available amount being offered by alternative creditors. For example, if you wanted to borrow 1000 pounds to address a medical emergency, going for 5000 pounds because the lender is willing will be a grave mistake.

  • There is a risk of improper use of the cash because you had not planned for it.
  • The borrower will also pay more because the interested calculated on a larger amount is bigger.
  • The debt will be repaid over a longer period which can cause fatigue and raise the risk of default.

It is advisable to carefully assess your ability to repay the loan and only borrow what you need. Note that this means a careful evaluation of all areas of personal lifestyle to determine your repayment capability.