Tag: credit score

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.