How Risky Are Logbook Loans?

Many financial experts will tell you to steer clear from logbook loans because of the high cost and the high risks. While they may have good points, it’s not always easy to do especially if you have bad credit to deal with.

For most people who have ever been refused a personal loan by major banks and lenders because of bad credit, logbook loans offer an alternative solution you can use to take care of any pressing financial needs. Whether you have overdue bills to pay or you need cash for an important investment, logbook loans are worth considering. Just remember that the promise of quick cash comes with strings attached. In logbook loans’ case, the strings include the high interest rate and the risk of vehicle repossession. More at this topic can be found at http://www.simplelogbookloan.co.uk/

If you’re in the market to take out a logbook loan, it’s best to know the true cost of the financial product before going through with the application. And no, it’s not as complicated as most people think. At its simplest, we’ll basically just need to focus on two key factors.

The Interest Rate

First is the interest rate. APR which stands for annual percentage rate is the financial concept lenders use to advertise their logbook loan offers. They specifically use representative APR which means that it’s not the actual interest, just the representative that you may or may not get when approved for a logbook loan.

For logbook loans, the average representative APR advertised in the market is 400%. But thanks to tougher competition among lenders, the interest rate has significantly become cheaper over the years. One of the most affordable logbook loans available in the market today is that offered by Varooma Platinum Logbook Loan.

With Varooma, you can borrow anywhere from £5,000 to £150,000 at repayment terms from 3 months to 2 years at Representative APR 98.05%. That’s a pretty good deal if we must say so ourselves. To illustrate how that translates to monthly repayments, let’s say you want to borrow the minimum loan amount. That’s £5,000 at a flat rate of 43% fixed p.a. If you wish to repay the loan over the course of 18 months, you will end up paying a monthly repayment amounting to £456.94 or £8,225 in total.

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The Possibility of Repossession

Other than the hefty interest rate, one other reason financial experts do not recommend resorting to a logbook loan is the risk of repossession. When you take out a logbook loan, you are essentially securing the loan against your vehicle. Not keeping up with the monthly repayments means your lender may seize your car and eventually sell it to cover your outstanding balance.

Before the repossession, borrowers are given ample time to keep up with their repayments. Your lender may sic their debt collectors on you at home. If you’re still unable to repay the loan after a given time, that’s when repossession is enforced as dictated by your logbook loan’s terms and conditions.

Should You Take a Logbook Loan?

Obviously, no one wants to lose their cars to a lender because of an unpaid logbook loan but the incident still happens to many borrowers anyway. That doesn’t mean it will happen to you as well. At the end of the day, it’s still all about knowing what you’re getting into.

As borrowers, the responsibility to borrow with caution lies on your shoulders. Regardless of the high interest rate and the risk of repossession, if you’re committed to borrow responsibly enough, logbook loans offer you an easy way out even if it may be costly.

A Quick Review of Guarantor Loans

If you have bad credit and looking to take out a loan, one of the most popular options worth checking today is guarantor loans. As opposed to other loans offered especially for borrowers with bad credit, guarantor loans offer a few advantages making the financial product more favorable than the more notoriously popular options such as payday loans.

A guarantor loan, as the name suggests, is a type of unsecured loan that requires a guarantor to co-sign the debt agreement with the borrower. You can borrow anywhere from £500 to £7,500 or sometimes more depending on your lender. The loan is expected to be repaid in 12 to 36 months.

Compared with other loan products for people with bad credit, guarantor loans, I believe, are the most affordable options available in the market today. It may not offer a high loan amount as secured personal loans but guarantor loans take the cake when it comes to the interest rate. The average representative APR (annual percentage rate) for guarantor loans is somewhere at 49.9%. That’s many times lower than payday loans and logbook loans with average APRs at 1,000% and 400% respectively.

If you’re looking for a quick cash solution to your financial problems and you have bad credit, guarantor loans are your best bet in terms of interest rate. It won’t be as cheap as other traditional loans but it’s definitely way more affordable than other bad credit loans.

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Getting approved for a guarantor loan, however, isn’t going to be as easy as when you’re applying for a payday loan. Both loans do not run credit checks on borrowers but guarantor loan lenders run one on your guarantor. This is the part why it make take a few days before your receive your money when you opt for a guarantor loan.

As the borrower with bad credit, it may also be harder to find a guarantor who will be willing enough to co-sign the debt agreement with you. Finding a guarantor can take time too but as soon as you have one, guarantor loans make a suitable loan option that offers just the right blend of cost and convenience.

How to Avoid the Payday Loan Debt Trap

Payday loans have been receiving a lot of negative reviews in the past years and rightly so. Advertised with the promise of quick cash, the personal loan offered mainly for people with bad credit come with hefty interest rates.

Most borrowers who are left with little to no option because of bad credit resort to payday loans despite knowing the dangers of the financial product. Making it worse for the borrowers are the controversial and sometimes harassing collection practices. Then there’s the problem of getting stuck with the payday loan debt trap.

Despite the dangers and if you still opt for a payday loan, we can’t blame you but we can help you avoid the debt trap. Below are four tips to keep in mind when taking out a logbook loan:

Consider it as the last resort

One of the lures of payday loans is the promise of quick cash. By quick, it means you can get the cash as soon as you get approved for the loan. This is good news for most people who are struggling to pay overdue bills or to take care of other financial emergencies. While easily accessible, payday loans work best if you consider it only as your last resort. Check all other affordable alternatives first before applying for a payday loan.

Make it a one-time option

If you are left with no choice but apply for a payday loan, it’s also worth keeping in mind that payday loans come with hefty fees. You can apply for a payday loan just this once. Make sure the next time you’ll need quick cash for any financial need, you never to turn to payday loans again. Otherwise, you’re only putting yourself in a kind of debt trap that is not only costly but also hard to get out from.

Seek for recommendations

To make sure that your payday loan is one of the most affordable offers in the market, seeking recommendations from other borrowers. If you know a family member, a friend or a colleague who have taken out a payday loan before, make sure to ask for their recommendations, tips and tricks if they have any.

Shop Around

When looking for the best payday loan deal, it’s also best to shop around and compare your options. Like with any important purchases, take your time to investigate your options as thoroughly as you can. You can use top comparison sites to compare the best payday loan lender in the market. Focus on key factors such as interest rate, loan terms and lender reputation. While you’re at it, make sure to read the small print for more info on hidden fees and charges.

Negotiate with your lender

Not all lenders are strict and hard-nosed. That may be hard to believe but there are actually online lenders who are willing to be more flexible with their loan terms. Your job is to find them. Once you’ve found the right lender, you can put your negotiation skills to good use. Don’t hesitate to speak with your lender if necessary. If you can’t make the payment by end of your payday, for instance, you can negotiate a new term with your lender.

Seek for professional help

When overwhelmed with your debt, there is really one way to go. You need to enlist the help of a professional to help you tread the complicated waters of debt particularly that of a high cost payday loan. Don’t worry because there are no fees involved when you seek help from the right nonprofit organizations.

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