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.

 

Why You Should Seek Assistance from a Financial Expert after Taking a Logbook Loan

The number of people taking logbook loans in the UK and defaulting several months down the repayment line is very high. The moment you end up knocking the door of logbook loan lenders is a clear indication that there is a problem and urgent assistance is necessary. Recently, laws have been passed to regular the Payday loans to try and cushion the borrowers from harmful practices. However, logbook loans are not well regulated, and many borrowers end up paying a lot in interest charges. Many have fallen deeper into financial woes after defaulting repayment of their logbook loans.

To prevent the logbook loan from becoming a debt trap, it is important to seek expert assistance. In this post, we establish why seeking expert assistance is very crucial after taking a logbook loan.

Financial experts help borrowers trace back the source of their issues

Financial professionals handle issues from clients with even worse situations in the past. The secret of getting out of the current issue is to understand its genesis. The experts will help you trace the origin of the financial woes and use simulations from other clients to look for realistic solutions. For example, you might have sought an emergency loan from a bank and subsequently lost your job. This can throw the repayment efforts into a dilemma.

A financial professional will help you to carefully look at personal lifestyle and create important financial pillars to cushion unexpected demands. For example, an emergency fund can provide all the funds for media assistance so that medical issues do not warrant seeking a loan.

Experts are important in drawing debt management plans

If the banks declined the application for loans, one of the main reasons might be poor credit score. Those with poor credit score are considered too risky, and banks prefer turning down their requests. Though you used the logbook loan as an alternative, a proper debt management strategy should be developed. This is where the financial expert comes in.

The finance professional will help you pick the right repayment strategy for faster clearance and freedom from debts. Depending on your situation, the financial expert might recommend the snowball method that involves attacking the debts starting with those that have low balances. Then, the repayment gains momentum as you clear the small loans until all debts are settled.

It becomes easy to improve personal credit score

While it is very clear that poor credit rating hurts personal ability to access loans, getting a higher score is never easy. Many people try for years only to find the score moving from poor to worse. However, a financial expert will make the efforts towards improving the credit score simple, realistic, and fast. Some of the best strategies recommended by experts in the UK include;

  • Borrowing from a personal account to build good history
  • Identifying areas of austerity to ensure that all the outstanding debts are cleared on time
  • Not overlooking even the common utility bills. They can also harm the credit score if referred to debt recovery companies
  • Checking and correcting errors in personal credit report with credit reference agencies

Borrowers can easily advise on additional streams of revenue

For many people seeking logbook loans, the argument is that they have run out of options. Well, a visit to a financial expert will surprise you because of the many alternatives suggested for generating additional resources. One good example is identifying areas of austerity that can release some cash. If you visit the theatres downtown every weekend, you can make some savings by subscribing to online movies. For others, a personal blog on an area of interest can help generate some extra revenue to help clear debt faster and accelerate you to financial freedom.

 

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.

 

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.

 

How to Reduce the Risks That Come With Logbook Loans

The risks that come with taking a logbook loan are numerous. As an option of last resort, logbook loans have become synonymous to high-interest rates, regular depression for borrowers, and the ultimate reality of having the car repossessed. With the family car being the second most important asset after the house in most cases, the risks involved can be too dire. In this post, we evaluate five ways you can reduce the risks that come with logbook loans.

Shop for the lender with lowest APR

While most logbook loans come with high annual percentage rates, the variation between different companies is very high. You can get a company that charges as high as 420% while another one only does 100%. It is, therefore, very important to look for the lender with lower interest rates to keep the burden of repayment lower.

Avoid penalties on early payments by carefully reviewing the agreement

If you read carefully through many logbook loan agreements, there are clauses that limit borrowers to repaying the credit only during stipulated timeframes. This means that if you have committed to clearing the loan in 24 months, there is no option of repaying earlier. You can note such offensive clauses by carefully reading through the agreement and insisting they are removed before signing. A good logbook loan dealer will even motivate you to clear the loan faster with reduced interest.

Prioritize the logbook loan repayment compared to other lines of credit

After taking a logbook loan, you need to appreciate that the dangers that come with defaulting are higher compared to other forms of credit. For example, if you have a credit card loan, it will only accrue interest, but no one will come for the family car or threaten to sell the house. However, defaulting on the logbook loan means that your car will be repossessed and sold. In fact, it could be worse than repossession and auction. If the lender sells the car but fetches less than the remaining loan balance, you will still be followed to clear the balance. It is, therefore, very critical to prioritize the logbook loan to avoid repossession.

Stay in touch with the lender and build trust

Every lender, from banks to logbook loan dealers, wants to deal with clients they can trust. This means being in touch and following the agreement for repayment. Even if you encounter some hitches with repayment for a couple of months, the trust between the two parties will make it easy to renegotiate the terms. For example, if you are late to remit the monthly payment because of delays on your salary, the lender will appreciate and allow you to fix it without repossessing the vehicle.

Ask your bank to make direct payment to the lender every month before the due date

Because of busy working schedules, it is not uncommon to find borrowers forgetting to remit money for their logbook loans. Others only remember when it is very late and ends up incurring unnecessary penalties. However, you can avoid these additional costs and risks by asking your bank to remit the cash every month a couple of days before the due date. The bank will only notify you that the payment has been made so that you can concentrate on other tasks and optimize personal output at the workplace.

Final verdict

While the logbook loans are options of the last resort, it is important to understand them and avoid falling deeper into financial troubles. By avoiding the risks using the outlined measures, you can plug the current financial gap and emerge stronger.

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 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.

Expert Advice on Raising Money to Clear Your Logbook Loan

Why do people go for logbook loans even though they are very risky and come with super high interest rates? Logbook loans are considered options of last resort after getting turned down by financial institutions because of poor credit score. The danger of taking of taking a logbook loan becomes evident when a borrower finds it difficult to keep paying high monthly rates.

For some people, this is the beginning point of their downfall, family breakdown, and loss of control. Immediately you default, a very high penalty is slapped on you. However, there is a lot you can do to raise additional cash for clearing the risky logbook loan. The following are expert suggestions that will help you raise extra cash, clear the logbook loan, and get out of debt completely.

Only pay the minimum for other loans and direct the extra cash to repay logbook loan

This is one of the main debt clearance strategies that experts advise clients to use with a high-risk credit. By meeting only the minimum repayment demand for most loans, the additional cash is redirected towards clearing the logbook loan because it is very perilous. You could negotiate with lenders to establish the minimum requirements or even discuss with them the best strategy for getting out of the logbook loan quagmire.

Get a bike and ride to work several days in a week

If you thought that options for raising cash are getting out, think again. The amount of fuel used on an average car in the UK is £ 2,300 per year. This is a lot of money that can be redirected towards clearing the loan. By considering riding to work several days of the week, you can redirect the saved money towards clearing the loan. Note that cycling will make you stay healthy and, therefore, could be used to cut the fitness club subscription. If cycling is not viable, consider taking public transport.

Make your own food and carry it to work as opposed to visiting a hotel

Many people end up using a lot of money at the hotel during lunch and tea breaks. However, think of the amount you can save by getting an alternative. Consider going for alternatives that are equally nutritious and reliable. For example, you can make food at home and carry it to work. Then, all the cash that was going to the hotel can be redirected to clearing the logbook loan.

Engage in a part-time job or open a side-business

In many cases, the cash people earn in the UK is hardly enough to meet all their requirements. Think of the mortgage you are paying, children school fees, loans, car insurance, food, rent, and other related costs. An additional source of income will come in handy to help you clear the logbook loan. Why not consider having a part-time job? For example, you could consider online jobs such as writing, consulting, surveys, or operate an e-commerce shop. For others, this could mean roping their spouses to engage in part-time tasks. A good example is involving your wife to run a baking shop. Take her for a short baking course, acquire baking items, remodel the garage, and open a website. Then, concentrate on selling the cakes to the local people and use the profits to clear the logbook loan.

Some people have started side tasks only for them to burgeon to fulltime employments and big companies. These options will not just help you to clear the logbook loan, but will also help to clear other debts and raise the credit score.

 

Is A Logbook Loan Worth It?

Logbook loans in the UK have become very popular not because they are easy to access, but also due to numerous controversies about them. They are quick and perhaps the easiest to access even when one’s credit score is very poor. However, financial experts go to great lengths to discourage people from them. From associated risks to high-interest rates, the reports of people who have sunk into deep trouble are always hitting the headlines of every media in the UK. Therefore, are they worth?

A logbook loan is a type of credit service where cash is advanced against your car. Once you sign the agreement, the ownership of the car is temporarily transferred to the lender. However, you must continue paying the agreed monthly payment to continue using the vehicle.

Why the logbook loan?

  • Easy and fast access to personal credit

The ever rising living costs have put people’s lives on the edge. In many cases, what they earn is never enough, and an urgent need for extra cash can throw them off balance. Now, even when getting a bank loan is part of the options on the table, the process is bureaucratic and tedious. However, a logbook loan only requires one to proof of car ownership and source of income. In some situations, the cash can be on your account within the same day. This enables you to tackle emergencies such as medical bills, rent, and others.

  • Ability to control what you borrow

If you opt to borrow from a conventional bank, the institution controls what you can get. This makes people feel passive. However, logbook loans make people become part of the process because they know the amount they can get. Some logbook companies give as much as 70% of the current car value.

  • No background checks for your credit score

For many people falling into debt and seeing the credit score plummet can happen within a very short time. However, getting out is a difficult task. In some cases, it takes years. However, as far as you have a car and can proof source of income to repay the loan, it is very easy to secure a logbook loan.

The dangers that come with logbook loans

On the flipside, getting a logbook loan is like following a dangerous route though everybody is talking about the perils on the way. The major risks include;

  • Very high-interest rates

While the conventional loans are very cheap and indeed flexible, the logbook loans are not. The APR (annual percentage interest) is very high. It often goes up to 400% by some companies.

  • Risk of further harm to your credit score

Though borrowers are rarely told, defaulting on logbook loan can easily cause the credit score to get worse. Because they are licensed lenders, their report to credit reference bureaus could further damage the score.

  • Danger of having the car reposed

In many families, the car is the second most valuable asset after a house. Besides, it is very important because it defines the family. Dad takes kids to school using it before leaving for work with wife downtown. Besides, it is used for shopping, going camping, and making the family life enjoyable. Getting a logbook loan means envisaging life without it! That is right. If you default, it will get repossessed, and life could change completely.

Final verdict

Apart from these risks, the logbook loan provides a reliable option of credit to all. The loan can only help you by getting a bigger picture before taking it. The bottom line is; do not go for it until all the other options have been exhausted. However, if you select a good lender, negotiate for better rates, and only borrow what you need; the loan is okay.