Logbook loans have become common forms of loans in the UK today. The number of people taking logbook loans has hit over 40,000; a very rapid growth from 3000 in 2003. Many people turn to logbook loans after getting turned down by conventional banks because of poor credit score.
Poor credit score is contributed by some factors including bad credit history, length or credit history, and the outstanding debts. If you have defaulted on the current loans, the credit score will be pulled down with a huge margin. Once you decide to go for a logbook loan, you need to think about these four things critically.
The annual percentage interest rate will be higher than bank rates
The interest rates charged by logbook loans are higher compared to what conventional banks charge. Before you sign the agreement, take a closer look at the APR. For example, if you borrow £1000, how much will you pay by the end of the clearance period? Here, the focus should be identifying the lender with lower rates and clearing the loan as fast as possible. If you can get the loan with the lowest interest rate, the higher the value for the credit.
Make sure to check on repayment terms and go for what is convenient
Many logbook loan dealers craft their agreements based on the individual business model. Because the borrower is not protected under the law, some lenders may put weekly or monthly payments. This is one hidden trick you must carefully decipher and negotiate with the lender. It is better to agree on a monthly payment if you rely on a salary. Besides, you should also leave a week or two after the date of salary maturity to cater for unforeseen inconsistencies.
The amount you need for a loan
When many people make requests for logbook loans, they have a specific need. However, this specificity easily fades away after realizing that they can get more from the lender. For example, if you were looking for £1000 to meet an urgent emergency, there is a tendency to borrow £5000 because the lender is ready to release the cash. However, this is a serious trap you must evade at all cost. The more a client borrows borrow, the higher the interest. Try as much as possible to borrow lower amounts for ease in repayment.
The ability to renegotiate with the lender
Now that you are about to borrow cash using the car, it is important to understand that financial issues can still arise and throw you off-balance the repayment process. Therefore, you must carefully look at the logbook loan from all angles on the entire repayment spectrum. The best lender should leave some room for negotiation in the case of issues along the repayment line. Ensure that the lender includes room for negotiation in the agreement such as slight reduction in monthly payment or covering unavoidable inconsistencies.
Note that you should never look for a logbook loan in a hurry to avoid picking expensive lenders and risking falling into deeper financial trouble. Even though you are in dire need of cash, carry due diligence on the company to borrow from.