Logbook loans are tricky business. In fact, according to many financial advisors, logbook loans should always be the last resort. They come with a very high annual percentage rates. In the UK, even with some lenders offering lower rates, the average APR can be as high as 400 percent. Whichever way one looks at it, the cost will add up the longer the loan lasts. Still, if you are in a situation where you will need a logbook loan, here are some tips from the experts on how to go about it safely.
One of the keys to the safe navigation of such a situation is the appreciation of the depth of the debt problem. Think wider than just the loan itself. For instance, if the reason for the logbook loan option was poor credit, work not only towards the clearing of the loan but also towards the improvement of credit score. Think about completely getting out of debt, rather than just dealing with the car loan. It might help to seek the help of financial consultant.
Regardless of the details of the situation, credit score plays an important role. Even with the loan secured, it is likely that the need for money has not and will not end. Think about what happens in case there is need for cash after the logbook loan has been cleared. It is important to keep track of one’s credit score. Regularly check and correct the score from various credit reference bureaus, clear current debts and establish areas of expenditure to reduce.
Additional revenue streams
Even with proper budgeting, without adequate revenue streams resources are almost always limited. There will be new expenses coming up and debts that need to be paid. In order to handle the logbook loan and service it adequately, seek additional revenue streams. The additional revenue stream does not have to be as much as one’s actual salary, but it will go a long way when it comes to the clearance of the loan. For instance, most people work online during their free time for extra income. One could also start a small business or go freelance.
The borrowing process
There are clever tips during the borrowing process that can make things much easier. As a general rule for borrowing or loans, it is advisable to stick only to what one can afford and what they need. Borrow the smallest possible amounts, and choose the shortest realistic time to get out of debt. Another useful tip is to evaluate the lender. Do not only look at the number of years they have been in business as an indicator of the quality of their service. One’s duration in service does not necessarily equal quality. Instead, place greater emphasis on what other customers are saying about them. Ask for customer feedback and if possible talk to a few willing past customers. Finally, always remain committed to monthly payments and schedules; the result of the process is dependent on the customer as much as it is on the company.