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.