Many people who take logbook loans end up defaulting because of the high-interest rates. Often, they have other loans, personal expenses, and emergencies to attend to that cannot be overlooked. If at some point you establish the burden is becoming too much, the best thing is acting promptly to avoid defaulting and sinking deeper into debt. Here are four most important things to do in such a situation.
Raise cash using alternative streams
Your logbook loan dealer is a business person, and the focus is getting regular monthly payments. Now, you should start thinking of alternative sources of revenue to augment the main salary. You should consider doing online jobs after work and direct the additional revenue to clear the loan. You can also engage family members in revenue generating activities. A good example is turning one of the main rooms in the house into a baking unit for the wife. You can also redesign a section of the house and rent it to generate some revenue.
The best area to try and generate additional revenue is the niche of specialization. This is because you have the expertise and new partners will value your input. For example, a mechanic with a local transport company who works from 8 am to 4 pm can look for a part-time job in a local garage.
Adopt the right austerity measures
Often, many people rarely realize they are overspending until a serious situation befalls them. If putting together the cash to service the monthly logbook loan is becoming a monumental task, simply take a walk through personal lifestyle and identify areas of austerity. Look at these examples;
- Instead of driving daily to work, consider taking the bus and direct the recovered cash to clear the loan.
- If you and your wife drive different cars to work, consider leaving one home and go to work together. This will save a lot in fuel and maintenance costs.
- Change personal entertainment model. If you are used to visiting the expensive theatre every Friday, consider taking an annual subscription to online live streaming companies.
- Instead of taking your meals from the most expensive restaurant, consider preparing meals at home and carrying it to work.
Visit a financial expert for professional advice
A financial expert is a professional who will help you to look at the logbook problem and entire personal debt issue from a broad perspective. However, many people rarely appreciate the benefit that a financial consultant can bring until it is too late. When you are experiencing difficulty repaying the logbook loan, a financial expert will help in the following ways.
- Help you to draw a realistic debt repayment plan. This may involve clearing the riskiest loans such as the logbook loan first.
- A financial expert can also help you take a financial management plan or debt consolidation and start a serious journey towards full recovery from debts.
- Though a financial expert might charge a fee, he will assist you to envision the ultimate financial freedom. Once this becomes a lifetime goal, it will be only a matter of time before you can take charge of everything from the financial point of view.
Discuss the problem with the lender
Many are the times when borrowers think that the main objective of a logbook lender is to simply recover the car after defaulting. However, this is not the truth. The process of recovering the car is often complex and expensive. The lender has to engage third party recovery companies and auctioneer to sell the car. Even in the event that the car is sold, there is likelihood that it will not raise all the cash borrowed. This could trigger a series of lawsuits trying to follow the borrower for the remaining amount.
Because of these logistics that are very expensive, many lenders are willing to negotiate when a client is having issues. Before things get completely out of hand, talk to the lender for a complete review of the conditions. Some can even allow you a reprieve for a few months as far as they will be recovered. However, these adjustments often come with a penalty attached to them.