Unravelling the Pros and Cons of Logbook Loans

Are you struggling to get a loan because of your poor credit? Do you need cash to take care of an emergency? The logbook loan might just be perfect for you. While it is easy to secure a logbook loan, it is important to consider the pros and cons before making that final decision.

The advantages of logbook loans

There are several merits here. First is the availability. There are many loan service providers that offer logbook loans all around the country, with some even offering the service online. This means one does not necessarily have to visit the physical office. Furthermore, they are typically processed very fast and are ideal for the individual needing quick cash. This is what makes them particularly attractive to the individuals with poor credit. Some loan providers even offer same day approval.

No credit checks

This is perhaps the biggest advantage; there are no credit checks for logbook loans. Poor credit can happen to anyone and can be because of defaulted or missed payments.  As long as you have a vehicle that can be used as collateral, then you will get your logbook loan very fast.

Large loans

With your car offered as collateral, you will have the opportunity with a logbook loan to borrow larger amounts than your typical unsecured loan. Amounts borrowed range from £500 to £50,000, with repayment periods of between 12 and 36 months. The rule of thumb for most borrowers is half the value of the vehicle, but some can go as far as 70 percent of the vehicle’s value.

Disadvantages

High APR

Logbook loans involve a high level of risk for the lender, and this is why they often have high interest rates. The average Annual Percentage Rate (APR) of the logbook loan is 400 percent, which will cover the interest, processing fees and other related charges in an annual basis. For the borrower, the reprieve is that competition has forced some of these rates down to an APR of about 200 percent.

Possibility of car repossession

Another disadvantage one must be aware of going in is the possibility of repossession. Logbook loans are secured by the vehicle, and there is always the possibility of losing the vehicle should one default. However, with a good lender, you will have the opportunity to make alternate arrangements, provided communication is given as early as possible. Repossession normally only happens if after several attempts at an alternative payment system, one still cannot pay.

Before going for a logbook loan, it is important to therefore shop around with the advantages and disadvantages in mind. Think about your situation and only go for the lender that has the best terms. Treat the loan process just like any other shopping process and compare the various deals before making a decision. Remember, every service provider will present themselves as the best; be very wary and make sure to look at the fine print of the deal. Further, it helps to be more familiar with such terminology as the APR, hidden fees and interest rates. With this information, the process of getting a logbook loan will be very smooth.

Types of Loans: Finding the Perfect Loan for Your Circumstances

Most people have been there: needing money urgently but not really having enough in handy. This is where loans come in and help. There are many types of loans available in the market today, but the choice of loan should be dependent on one’s situation and circumstances. Are you looking for a loan? Here are some examples of options you might opt for.

The unsecured loan

This is basically a personal loan which is not connected to one’s assets. The loan is issued based on the credit profile of the borrower and the economic circumstances, and not necessarily what they can offer as collateral. Most of the time, they are offered for lengths ranging from 1 to 7 years, with borrowing levels of up to £25,000. This number can be significantly less for some borrowers.

The implications of taking out this loan is that default is not punished by loss or repossession of any asset, unless it is part of a larger financial arrangement that specified some sort of personal liability. The opposite of this is the secured loan, which is tied to an asset like a house, property or vehicle. If one defaults then the lender repossesses the property that has been put up as collateral to recover their debt. Because of the security component, secured loans typically offer higher limits than unsecured ones. They are also normally cheaper than the secured ones.

Payday loan

A payday loan is more of a stopgap measure, a short term loan option that fills a gap before regular payment comes. The typical payday loan is often expected to be paid back within a period of one and 30 days. They normally involve small amounts, between £25 and £1,500, smaller than is normally offered by other lenders or loan types. Due to their short term nature, they might also be referred to as same day loans, instant loans or fast cash loans. They also carry much higher interest rates than other comparable loan types.

Logbook loans

The logbook loan is technically a secured loan, but one where the borrower puts up their vehicle as collateral. The lender will then take ownership of the vehicle until the debt is paid. However, while the lender essentially has ownership of the vehicle, it is ‘lent’ to the borrower during the loan period to continue using. The ownership of the vehicle is transferred back to the owner once the debt has been paid. Normally, the logbook allows one to borrow up to a half of the market value of the vehicle.

Still, if the vehicle’s value depreciates during the time of the loan, the borrower will still be liable to meet the shortfall. One particular advantage of logbook loans is that they offer loans to people with poor credit scores who might otherwise be denied loans through the normal channels. Logbook loans should be differentiated from car loans, which are loans given for the purpose of buying cars. Car loans can be given be through banks directly or on hire purchase through dealerships.

Logbook Loans: Loan Borrowing Tips for the Customer

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.

Strategize

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.

Credit score

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.

 

Getting Out Of Financial Trouble After Taking A Logbook Loan

If you are considering taking a logbook loan, the chances are that you are in a sort of financial trouble. Over 90% of people who go for logbook loans in the UK today are under serious financial distress. In most of the cases, their applications for credit have been declined by conventional lenders because of poor credit score.

At this point, many see like there is no light in the near future. But this is incorrect. A closer look at a significant proportion of those people who are very successful in the UK today will reveal that they had sunk to the bottom of their lives at some point. Therefore, your situation is not unique. Here are some useful tips to help to turn them into stepping stones to success.

Draw a comprehensive plan to clear the logbook loan and other high-risk credits

Debt problem for many people often unfolds rather fast. Some do not even know how it happened. Well, consider that history. What is more important is ensuring that you get out of the problem.

Start by drawing a good debt recovery plan. This means appreciating that there is a problem and committing to counter it. There is no letting go!  A recovery plan will require settling to some basics of budgeting. Factor, your income and ensure that ample resources are dedicated to clearing the logbook loan and other high-risk loans.

Remember that the budgeting should incorporate all the components that are meant to help you keep moving. Make sure that the daily expenses such as rent, food, transport, and other essentials are catered for. Then, direct the remaining funds to clear the logbook loan and other debts.

Make the personal credit score improvement the driving force of everything

One thing you must appreciate is that there is no financial freedom without improving personal credit score. Indeed, it is the main reason you are in the current hole. Therefore, you must place raising credit score the priority in everything you do. How can this be achieved? Though there is no shortcut for it, it will come as a surprise to realize that some methods are indeed very easy to implement.

  • Correct your credit score with credit reference bureaus.
  • Borrow from your account. Since no bank is willing to lend you cash, go ahead and borrow from your account and repay on time to build a good credit history.
  • Make sure to clear all the outstanding loans. Do not ignore clearing even the monthly utility bills on time.
  • Avoid overspending and direct the efforts to clear outstanding credit and building an emergency.

Take to austerity in personal lifestyle

Though it might appear that everything is against you in so many ways, take a closer look and will appreciate a lot of loose ends. For example, instead of taking lunch at the expensive restaurant, consider carrying food from home and directing the savings to clear loans. Other areas of austerity you might find important include;

  • Subscribe to online movies as opposed to going to the expensive theaters every week.
  • Ride to work or take the public transport instead of using the family car.
  • You could even cut the number of holidays to one instead of three and commit savings to growing the saving portfolio.
  • Work towards creating multiple lines of income.

The final take

While taking a logbook loan is no doubt considered the lowest that a person can sink financially, it can also be a turning point. Take a break and look at it differently. Every cloud has a silver lining. Let the logbook loan become the last and the first stepping stone towards your personal, career, financial, family, and holistic success. It has been done, let this be your turn to grow.

 

Two Special Benefits That Make Logbook Loans Very Attractive

Logbook loans are the saving grace for people with very poor credit score. Because of the poor credit score, your loan options are very limited. Most banks will not want anything to do with you because of the risk involved. Even those who agree to lend you will demand collaterals such as a house. The best way out of the problem is getting a logbook loan.

While logbook loans have had very bad publicity because of high-interest rates and associated risks, they come with two unique benefits that make them very attractive.

The best option for damage control

When one is faced with an emergency such as an accident, there is a need for urgent cash to meet the unexpected bills. However, such bills do not only come because of related medical emergencies. You might need urgent cash to cater for marriage, death, handling a new contract that came too soon or even a holiday. Now, with all the lending institutions turning you away at first sight because of poor credit rating, a logbook loan is one of the best options for damage control.

In some cases, people take logbook loans to clear other loans. This allows them to only concentrate on paying a single logbook loan to avoid defaulting. Even if you have poor credit score, do not let the outstanding debts pull you down any longer. You have the option of taking a logbook loan for damage control and reducing the stress of handling multiple loans.

Notably, the logbook loans are more flexible compared to the conventional bank loans because borrowers can negotiate the APR, terms & conditions, as well as the repayment period. Do not simply take the rates offered by lenders; negotiate for better terms.

An opportunity to address long-term credit problem

In addition to the fact that a logbook loan is easily accessible, you will also enjoy long-term credit related benefits. If you have poor credit, accessing credit in the UK is an uphill task. But hold on. One of the solutions for addressing poor credit score is demonstrating commitment and ability to repay on time. Therefore, how is that possible when you do not have access to loans? At this point, you need to work for a reliable solution that can help to address the problem conclusively. This is where logbook loan comes in.

Because logbook loan companies are willing to lend cash to all, they present a unique opportunity to address the credit score problem and march to financial freedom. One, you can clear the existing debts and continue dealing with a single lender. Because credit reference agencies use the outstanding loans as an important factor in calculating the credit score, the score will improve significantly.

Some people also use the logbook loans to increase their streams of revenue. Some use the cash to start side businesses. For example, you could start a baking venture and supply the cakes to neighbourhoods. In other cases, creative people can use the cash to redesign part of their homes to create a rental unit.

The final take

While it is true that the risks involved in logbook loans are many, you can use the credit to redefine personal financial future. Notably, you should be extra careful when selecting lenders by reading reviews, negotiating for better terms, and clearing the loan as fast as possible

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.

 

Important factors you should know about logbook loans

Logbook loans are fast becoming the loan option of choice for those of us who suffer from a bad credit rating but still own a car. Unfortunately, in today’s economic climate many people are falling deeper and deeper into debt. This means they often default on their debt which in turn drops their credit rating significantly.

And if you are in that situation, if you need a credit product of some form, be it a loan or perhaps even a mobile phone on a contract basis, you simply will not be approved. But there is hope for those suffering from bad credit and one of those solutions is a logbook loan.

In this blog, we will be looking at a few important things you should know about logbook loans so you can know what to expect when you apply for one for the first time. Having the knowledge beforehand takes the stress out of your application and makes things so much simpler. Let’s take a closer look.

How does approval for a logbook loan work

When you apply for a logbook loan you will need to provide a number of documents as part of your application. This has been discussed in greater detail on this site so we won’t go into it too much here. The great thing about these loans is that approval is quick and simple. Once you have applied (usually online), handed over the necessary documents and had your car assessed for its overall condition, you will know whether you have been granted a loan in as little as two hours.

Approval is done quickly as there are no credit checks necessary. The loan provider just needs to do some calculations as to the loan amount, repayment amount and a few other details based on the value of your vehicle as well as your monthly income.


 

 

How much can be borrowed?

This often differs from loan provider to loan provider but in general, the amount that can be borrowed is from 500 pounds to 50 000 pounds. Remember this is totally at the discretion of the loan provider and is based on the value of your car as well as your income and the amount of money you are able to pay back each month. The lender has your best interests at heart and it is important that you do not overcommit yourself, otherwise, if you miss payments, you may lose your vehicle.

Must the applicant be employed?

Yes! You must have a monthly income otherwise how will you be able to pay back the loan. It doesn’t matter that it is not a permanent job (for instance, you may be a waiter) but the fact that you earn money is crucial.

Repayment periods

This is something that you will discuss with the lender. Bear in mind the longer the terms, the less you will pay each month but the more interest you will have to pay. Choose a term that works for you. Also be sure to check if there are any prepayment penalties. Some lenders do charge if you pay your loan back before the agreed term amount.

 
 

Repossession

Make sure you know exactly how repossession works should you default on your loan. Some providers will take the car after just one missed payment. We believe that the borrower should be given every chance of making up for any missed payment before a car is repossessed to cover our costs.

So there you have it, a few important points to be aware of when taking out your first logbook loan.

 

Why logbook loans are a necessary evil

No doubt, the internet is laden with arguments for and against logbook loans. Proponents of logbook loans see it as a wonder product, a means through which they have access to credit irrespective of their poor credit rating. On the other hand, opponents of logbook loans term it risky and a form of extortion going by the high interest rates associated with. While there is some merit from both the proponents and opponents of logbook loans, one thing that we can all agree on is the fact that logbook loans are a necessary evil.

Let me try to paint a picture for you. We all know that credit checks are a standard procedure when a person seeks to apply for any kind of credit. Now take a moment to imagine a situation whereby you urgently require credit for whatever reason but cannot be approved by any high street bank or financial lender because of the state of your credit history. Sucks, right? Unfortunately, this is an all too familiar experience to the majority of UK citizens struggling with bad credit rating.

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While in the past majority of UK individuals with a poor credit rating resigned themselves to fate and hoped for the best, the introduction of logbook loans changed the narrative for the better. In other words, logbook loans gave those with a poor credit history a new lease of life. Perhaps, you are wondering what a logbook loan is. Well, from its name, this is a type of credit facility that is secured against a person’s car. In short, if you do not own a car, you cannot be considered for a logbook loan.

Of course, it is easy to think that you can set up any car as collateral and be considered for a logbook loan. This is not usually the case. There are indeed exceptions. For one, logbook loan lenders insist that the car you wish to avail as security should be legally registered in your own name. In other words, you cannot use your spouse’s car, your parent’s car or a colleague’s car as security for a logbook loan. You must be the legal owner and the said car should not have any type of financial attachment to it not to mention that it must be in good condition.

That said, the requirements for applying for a logbook loan are pretty simple. You must be a United Kingdom citizen, own a car registered in your own name and be a person of sound mind above the age of 18 years. If you meet the aforementioned, you need not worry about the state of your credit history as the car acts as collateral. Should you be unable to meet the end part of your bargain, the lender can always dispose off your car and recoup their money.

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In light of that, why are logbook loans a necessary evil? Well a lot of people are repulsed from logbook loans because of the fact that they are an expensive way of availing credit. To some extent they are right considering that the average APR for logbook loans is 400%. However, think about it. If you have bad credit and cannot avail any credit because of your poor credit history, logbook loans are your best bet. Consequently, logbook loans accord you an opportunity to rebuild your credit history because the only way you can do that is by diligently servicing your loan without default. Of course, this will gradually improve your credit score status. If you have no credit history to your name and face problems availing credit because high street banks have no way of telling how responsible you are with credit, look no further than logbook loans!