How to Pay Less On Your Logbook Loan

Every moment that the term logbook loan is mentioned, what comes to mind is a very expensive form of credit. In fact, many financial experts will strongly advise you to refrain completely from taking out bad credit logbook loans. However, this does not always have to be the situation. In this post, we bring you four ways that can help to make the logbook loan cheaper.

Select the right lender

Though the logbook loans have such a bad name in the public domain, there are lenders out there who are committed to helping clients plug the financial gaps more affordably. Therefore, you must look for the right lender who is licensed and committed to helping clients address their financial issues. It is particularly important to factor lower APR, debt collection procedures, and flexibility.

Negotiate for lower APR

Unlike it is commonly thought, you will realize that many logbook loan companies are out to do business and want to make a good name for every client. Therefore, they are willing to even renegotiate the APR to attract more clients. You should, therefore, talk to the lender to negotiate the APR. Many are the lenders who leave a negotiation margin of between 2% to 5%. Though this might appear small, it will be a great amount when compounded over a long time frame.

Read the logbook loan agreement carefully to identify and decline any hidden costs

Though the main focus for most people borrowing logbook loans is the APR, they often forget about other hidden costs. Some companies include hidden costs in their agreements that raise the overall repayment amount with a significant margin. To avoid these hidden costs, you must read the agreement carefully and pinpoint the additional unnecessary payments. You should particularly negotiate to remove clauses that add penalties for clearing the loan earlier. Many lenders will be willing to relook at the agreement to avoid losing you as a client.

Only borrow the amount you require

Though many people turn to logbook loans because of specific needs, some change their minds after realizing that their cars can fetch more. For example, if you wanted only £900 for an emergency and realize that the lender can give up to £6000, there is a tendency to go for the highest amount. However, this is one of the dangerous pitfalls that will prolong the repayment timeframe and interest.  It is important only to borrow what you need and if possible keep the figure as low as possible to make repayment easy.

Repay the loan within the shortest time

One fact that you must contend with is that the longer it takes to repay a loan, the higher the amount of interest. If you take a logbook loan and commit to repaying it over a shorter period, the interest will be lower. For example, the amount of interest you can pay for a logbook loan within 24 months can be halved by committing to repay within 12 months at the same interest rate.

 

Trouble a Step Away: A Personal Account of Five Things That Can Cause You Serious Problems with Logbook Loans

Borrowing from a bank is the primary option for accessing credit. However, many people end up getting declined because they have a very poor credit score or lack a constant source of income to proof they can repay the loan they are seeking. In summer last year, when I applied for a bank loan, my credit score had hit an all-time low because the mortgage, credit card, and a few bills repayments had fallen behind schedule.

The reality that I could not get funds made me to start looking for an alternative immediately. However, I fell into trouble with the logbook loans because of the following five things.

(1) Looking for a logbook loan dealer in a hurry

Just like many people do after getting bank loans declined, I rushed to the nearest logbook lender. This was a grave mistake that I came to regret later. The lender I picked had a very high APR 395%.  Besides, the lender had very bad debt collection procedures and was known for hasty repossession of cars within a few months of default.

It is very important to look for a good lender who has a good history, offers lower interest rates, and remains flexible during the loan repayment period.

(2)Borrowing the maximum that was being offered

Because the bank had declined my loan request, I was still angry when searching for an alternative. Therefore, I went for the maximum that the logbook loan dealer was offering as opposed to what I needed. While I only wanted £1650 for a medical emergency, I borrowed £7100 because the lender was willing to give the money.

I failed to appreciate that the more I borrowed, the higher the repayment interest over a longer period. The long drag caused fatigue, and I ended up defaulting after only 16 months.

(3) Not drawing a credit repayment strategy

Immediately you get a logbook loan; the first thing is drawing a good repayment strategy. This strategy should prioritize high-risk loans to avoid getting stiff penalties. Instead of allocating more money towards the logbook loan, I continued focusing on the credit card loan and student loans. While they are still loans that needed to be repaid, going slow on them would only accrue some interest, but no collateral was at stake.

(4) Hiding from the lender after falling behind the repayment schedule

The moment you notice that things are not working your way after taking a logbook loan, it is important to take drastic measures to prevent everything falling apart. In my situation, I went into hiding. I left my house and rented an apartment downtown London. However, the lender kept looking for the car and finally caught up with me in one of the shopping malls. Without even asking the owner of the car, I entered into the mall only to come out and get my car being tied to a recovery truck. No effort to persuade them would deter their actions.

How I got out of trouble

Realizing that everything had finally crumbled, I rushed to a friend who had started a new practice in financial advisory. Upon listening to my story, he lamented that it was very late to rush for help but offered to help anyway. Here were his recommendations that did not just help me address the logbook problem, but also enabled me to march to financial freedom.

  • We drew a credit repayment model that prioritized the logbook loan
  • I agreed to use him as by credit management expert
  • He reached the logbook loan dealer, offered to clear the amount I defaulted, and follow the previously agreed schedule
  • Took serious austerity measures that included riding and not driving to work (all the released cash was directed to repaying the loan)
  • Started working on improving credit score to make me eligible for lower interest loans in future

 

 

Expert Tips on How to Emerge Stronger After Taking a Logbook Loan

When conventional banks turn down loan applicants, one of the next alternatives for many people is the logbook loans. However, the logbook loan comes with numerous risks that make every financial expert to advice clients to try as much as possible to stay away. As an option of last resort, many people are more interested in getting the loan approved and less focused on how they will repay. This is diving into the lender’s trap because such borrowers easily take what is available rather than the best option for them.

Key dangers of taking a logbook loan

  • Very high annual interest rates of more than 400%
  • Harassment during money recovery especially after defaulting
  • Danger of getting the car reposed if you default payment
  • In the event that the car is repossessed and sold but the cash is not enough to clear the loan, the lender can still come after you to get the additional cash
  • The danger of sinking deeper into debt and harming your credit score

Tips on how to emerge successful and stronger after taking a logbook loan

While the dangers associated with logbook loans are many, financial experts insist that you can still emerge more successful. Here, the target should be ensuring to clear the logbook loan as immediately as possible, reducing other loans, and raising the credit score. Here is how to do it.

 

  • Draw a credit repayment plan that prioritizes the logbook loan

The first thing is appreciating the risks that come with logbook loan and drawing a good repayment plan. This means relooking at all the income sources and adopting an appropriate repayment plan that prioritizes higher risk credits such as the logbook loan. It is important to factor all your income sources, expenses, and place greater effort to repaying the logbook loan.

  • Work on areas of austerity to release some funds for clearing the debt and others

To clear the logbook loan faster and emerge more victorious, you must adopt austerity measures and direct the cash to clear the loan. For example, you could get a bike and use it to ride to work as opposed to driving. Other areas of austerity include cutting the number of holidays, reducing gym subscription, and adopting energy conservation tactics.

  • Order your bank to automatically remit the monthly payments

Because of busy daily schedules, many people find it difficult to follow the repayment schedules. The impact is unnecessary delays that bring about hefty penalties. To avoid these penalties and conflict with the lender, authorize your bank to remit the cash before the agreed repayment date. This will help you to relax knowing that all monthly dues will be remitted on time.

  • Seek help from an expert on the problem

If you are finding it difficult to follow the monthly repayment schedule, it is an important indication that expert assistance is needed. Do not wait for things to get out of control. Look for a financial expert for assistance. Many financial experts have handled similar situations, and you can rest assured of getting the needed help. For example, they will help you to relook at personal finances with ultimate focus trained on attaining financial freedom.

Five Reasons Why Your Logbook Loan Request Was Declined

Applying for a logbook loan is very simple and straightforward for many people in the UK. Having a loan request from a conventional bank declined often makes people rush to logbook loans because they can easily offer the needed cash for an emergency, clearing bills, or other urgent needs. However, a significant number of people still get declined for their logbook loans despite having cars that can help them get credit. Here are the main reasons why a logbook loan dealer may decline your loan request.

1)      Inability to proof you can repay the money within the specified timeframe

In addition to proofing the identity of the car, most lenders want to have the assurance that you can repay the credit within the agreed timeframe. This means being employed or having a business with a stable income. If you cannot proof the source of sufficient income, the request will get declined.

2)      Asking for cash that is more than your cash value

In many cases, lenders are willing to give out cash up to 60% of the vehicle’s current value. If you ask for cash that is more than the current value of the car, the lender will simply decline the request. It is, therefore, important to get the correct value of a car and only borrow the cash you want as opposed to going for the optimum that a lender can give.

3)      Borrowing from a dealer outside your jurisdiction

In the UK, dealers are licensed to only lend clients from specific areas. For example, if you are from London, a lender in Ireland might decline your application. It is very important that you check for lenders authorized to operate in your area of residence to raise the chances of getting approved.

4)      Failing to provide enough info about your financial status

To make a decision to approve a loan, the lender must have all your personal and financial details. For example, you should attach documents such as bank statements for the last six months, confirmation of your employment, and application. You also have to agree with the lender’s terms and conditions. Before applying for a logbook loan, it is important to check all the requirements and supply the required documentation.

5)      Very poor credit score and other loans on your shoulder

While logbook loans are preferred because your credit background is not considered, many lenders will carry due diligence to avoid dealing with high-risk parties. Though the borrower is never told, the lender checks those with very poor credit and declines the request. If you have a recent loan and other unsettled lines of credit, the chances of defaulting on the logbook loan are very high. Many lenders will simply decline your request.

What to do if declined for a logbook loan

If the logbook loan dealers decline your request, here is what you can do;

  • Consider alternative sources of cash such as credit unions and borrowing from friends
  • Check with a different lender within your jurisdiction
  • Identify all the required documents and provide them when making the application
  • Start working on improving your credit score to win trust from logbook lenders and other financial institutions
  • Think of internal methods of raising some extra cash such as austerity measures on the personal budget.