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.