Logbook loans are popular not only because the financial product is easily accessible but also due to the controversies surrounding it. Yes, logbook loans are quick and easy to avail but it also comes with high risks and high interest rates. For these reasons, many financial experts shun the personal loan.
Despite the warnings, however, borrowers are not to be discouraged. Many continue to avail the loan for the simple reason that it fulfills its promise of quick cash. When you’ve bumped into a financial emergency and you have nowhere to get quick cash from, logbook loans offer an easy way out.
Granted that you own your vehicle and you meet the eligibility criteria, you can avail loans from £500 to £50,000 or up to 70% of your vehicle’s official trade value in general. With these loan offers, you can practically meet a wide range of personal needs from overdue bills to rent payments, medical expenses and even major investments.
But like with any other type of debts or loans, there’s always a flip side. For logbook loan’s case, it’s the high interest rate. On average, the loan is advertised to come with an average representative APR of 400%. Convert it into cash and that’s a lot of money to pay for a personal loan.
Other than the high interest rate, there’s also the risk of repossession to worry about. In the event that you can’t repay the loan, you may lose your car for good. A sad consequence nobody wants but still happens to many logbook loan borrowers. Read more about this at http://www.simplelogbookloan.co.uk/
So are logbook loans worth it? If you’re only looking at the high cost, the answer is no. But if you look at the entire picture, there are cases when logbook loans make sense. As borrower, it’s your job to make sure that you borrow only when it makes perfect financial sense.
If you’re like most consumers, chances are high that you’ve had your fair share of personal loans. I have applied for several loans myself. I am still paying my mortgage loan, for example. I have also applied for an auto loan a few years back and I have dipped my toes trying different types of unsecured personal loans.
For each loan, I always learn something new by the time I’ve fully paid what I owe. Whether it’s with interest rates, hidden fees or the processing time, I found out that each type of loan has their set of pros and cons. There is no one loan I prefer but between secured versus unsecured loans, the former category always wins in my book.
I like secured loans better despite the longer processing time and high risks for several reasons. One is the more flexible loan amounts. With secured loans, you can borrow larger amounts since there’s collateral involved in the picture. Repayment periods are also longer so even if you borrowed a ton of monthly, the monthly dues aren’t going to leave you broke. But best of all, I prefer it for the lower interest rates.
Who wants to pay a lot of money just for the interest alone after all? Not I certainly. Probably not you either.
So while the risks are pretty high with secured loans, I’d rather have my home or car to serve as collateral than settling for an unsecured loan attached with hefty interest rates. With my property as security, I am also more determined to stay as responsible a borrower as possible. I don’t want to lose my car or my home so I am more inclined to pay my repayment dues on time until fully paid off. If it’s up to me, secured loans always outweigh unsecured loans in most aspects at least.
Whether you’re applying for a small short term loan or a large secured loan, there are key tips and tricks you need to know about if you want the best deal available in the market. These tips I’ll share will ensure you’ll be able to avail personal loans suitable for your needs and budget. If you have a good credit score, that’s another advantage at your disposal since interest rates are usually lower for consumers like you. But even if you have bad credit, the following tips should still work anyway:
Know your needs
Like it or not, this is the first thing you need to do. Sit down and evaluate your needs. If it’s just a want might as well postpone the loan for later. Borrowing money can be a tricky business which is why its imperative to know your needs first before you start shopping around.
Set your budget
It’s not just how much you need that you should find out. You also have to know your budget. After all, you’ll be paying for this personal loan for quite some time usually for several years if you’re applying for a secured loan. Never go out there without sitting down and evaluating your budget. Find out how much you can comfortably afford to set aside for monthly loan repayments before finalizing any decision.
Now it’s time for the fun part. At this point, you are ready to shop around for the right personal loan. Never settle with the first lender who touts to offer you the best rate in town. If you really want to snag the best available loan deal, you need to browse through as many deals as possible. Just think of it like shopping for shoes. You need to check all the details before you say yes.
Use comparison sites
If you don’t have the luxury of time to shop around for personal loans, you can take advantage of top comparison sites in the UK. These sites do all the hard work for you by compiling top lenders in the market. All you need to do know is zero in on the important factors such as interest rate, loan amounts, repayment periods and hidden fees.
Read the small print
You might be excited to ink the deal but don’t do it yet unless you’ve read the small print. Lenders may advertise their products as ones with the lowest interest rates but they may bleed you out through hidden fees. To ensure you’re going to end up with the best end of the deal, take your time to read the small print for details about hidden fees and other undisclosed charges. Or you may just directly ask your lender for details to save time.
Whether you’re in the market to take out a personal loan or apply for a mobile phone contract or get a new credit card, your credit score is a major consideration for providers and lenders. Having bad credit, for instance, can mean a lot of disadvantages. In fact, your application is going to be refused more times than it will get approved. With this in mind, it’s important to build a good credit history from the get go. If you’re a young consumer, this guide is especially for you.
Get a suitable credit card
If you’re in college and you’re just starting out with building your credit score, the best place to begin with is getting a college credit card. It is not only easy to apply but its terms are especially designed to suit consumers like you.
Either you acquire a credit card or take out a loan to become an authorized consumer. This is the only way to build credit history. Even if you don’t like debt, you need to get your feet wet if you want a good credit score to begin with. Just remember that debt per se is not bad. You just need to be a responsible borrower to avoid any unpleasant consequences.
Apply for a secured credit card
If you’re not confident with your ability to control your spending, you might be better off getting a secured credit card instead. This type of cards is designed so it will be easier for you to stay within your means. With secured credit cards, you will be required to make a deposit. The deposit is like the collateral for your debt which is also usually the basis for your card’s credit limit.
Secured credit cards are great for building credit scores provided that you use it responsibly and pay your dues on time.
Take advantage of store cards
Just in case you have a hard time getting a standard credit card, you may consider getting a store card instead. A store card is easier to get approve for but the interest is usually higher. Like with other types of credit cards, the trick is to maintain a reasonable balance. Swipe wisely and pay each bill in full at the end of the month.
Young consumers are encouraged to apply for one to three store cards as a start. Again, we reiterate to use them wisely and pay them consistently if you want a good credit score.
Pay your bills on time
Another great way to build credit history for beginners is to pay your bills on time. If you’re renting, for example, this is the best time to ensure your payments are always on time and in full. For this to have a positive effect on your credit score, however, you need to make sure your name is on the lease. You also have to find out if your landlord reports your payment activities. Otherwise, you may need to pay rent through other services which track your payments and reports them to the right agencies.
The same principle applies with other utility bills. Again, make sure your name is on the lease and your activities are reported accordingly.
Get a phone contract
Like everyone else, you probably need a phone contract for your phone services. Like with rent and other bills, you need to make sure your name is on the contract. Then pay for your monthly bill on time to add to your credit history. If you’re responsible and consistent, chances are high that you’re going to have a good credit score as a result of your efforts.
There are two major types of personal loans which are unsecured and secured personal loans. Each type has pros and cons as is true with any type of debt. But if you wish to take out a large amount of loan for a major investment or a major expense, you are better off taking out a secured loan. Just remember that the risks are also higher than unsecured loans. In any case, here’s a smart guide to secured loans to help with your loan decisions:
What are secured loans?
Secured loans, as the name suggests, are loans that are secured against an asset or a type of collateral. To avail the loan, you need a property such as a home or vehicle to use as collateral. Since there’s a security involved, loan amounts are significantly higher, rates are lower and repayment periods are longer. In other words, these types of loans are ideal for property owners who need a large amount of loan for a major financial need.
What are the types of secured loans?
There are many types of secured loans but the most common of which are mortgage, home equity loan or line and auto loans.
If you’re excited to buy your first home and need help with financing, getting a mortgage loan is the way to go. Just remember that this is most likely going to be one of your most important purchases. Before you say yes to a mortgage deal, don’t rush into signing anything. Take your time, compare your options and do your homework.
Another common type of secured loan is home equity loan or line of credit. In general, you can borrow up to 80% of your home’s current market value minus your mortgage balance. This type of loan, therefore, is designed especially or home owners. With home equity, you can avail of a one time lump sum to cover a major expense or you can open a line of credit which can give you ongoing access to your home equity
If you own your vehicle and it’s free or almost free of any financing, you can use it as collateral for your personal loan. You may also consider refinancing your auto loan if you want to free up some cash you can use to meet other financial needs.
Other types of secured loans you may not know about involve your savings accounts, CDs and other types of investment as security. Compared to the aforementioned secured loans, this type is generally easier to get approved for. Processing is also very speed. In fact, you can get your funds within hours or the next business day provided that you meet the requirements.
How secured loans work?
Secured loans as opposed to unsecured loans are more complicated since there’s a security involved. Your lender will have to keep your property title or deed meaning temporary ownership is essentially handed over to your lender. This means you could lose your home, vehicle or any asset which you used as collateral for the personal loan if you are unable to repay the loan.
While secured loans offer some advantages such as high loan amounts and lower interest rates, the risks involved are also higher. Make sure you know what you’re getting into before going through with the loan application. As a simple rule, borrow only what you can afford and what you need to avoid losing your property and face any financial consequences you may be unable to handle in the end.
Maybe you need to borrow money to pay for car repair, an overdue bill or to cover last month’s bill. Maybe you’re buying a new car and you need down payment. Maybe you’re starting a new business and you need additional capital. No matter your needs are, borrowing money comes with advantages and disadvantages. It is a major decision you need to carefully and thoroughly think through.
To help you make sure whether borrowing money is the right route to take, here are key questions to ask:
Do you really need the loan?
One of the first things to ask yourself if you’re thinking of taking out a loan is if you really need it or if you just want the promise of quick cash. Remember that there’s a difference between need and want. Sometimes, borrowing money is not the answer if you just want it because you can. So before you sign any dotted line and add some strain to your budget, it’s best to get it right from the beginning. Between need and want, the former is always the better reason for a loan.
How much can you afford?
Other than the why behind the loan, the other equally important factor to consider when borrowing money is your budget. Sit down and take your time to check your budget. Find out how much you can comfortably afford to set aside for loan payments per month so you won’t have to worry about due dates later on. If you think you’ll find it difficult to take care of repayments, it might be best to postpone the phone for now.
What is the interest rate?
You’ll also need to find out the total amount you’ll need to repay. This means finding out about the interest rate, hidden fees and other charges associated with the personal loan. Interest rates usually vary from one type of loan to another. Make sure you do your homework and compare your loan options accordingly. Remember also that some borrowers may advertise low interest rates but bleed you out with hidden fees. Always make it a point to read the fine print to know more about hidden fees.
How long will it take to repay the loan?
In addition to finding out what you can afford, you should also take a look at the repayment period. Some loans require you to repay the money in less than a year. Others may offer longer terms. Secured loans, for example, let you repay the loan for years depending on the amount and type of security involved. You can also tailor the amount and repayment period according to your budget to ensure you’ll be able to handle the monthly repayments without glitch.
Does the loan require collateral?
Short term loans generally do not require collateral which means loan amounts are also smaller as opposed to secured personal loans. If you need a large amount of money for your financial needs, you’ll have to consider what type of collateral you can use to secure the loan. There are many types of secured loans to compare when you’re ready to take out a personal loan.
What happens if you delay or miss a payment?
If you carefully considered your need and budget, missing a payment shouldn’t be a problem. But it can still happen so it’s best to cover all bases. Before you sign any debt agreement, ask your lender about delayed or missed payments and how much charges or hidden fees it may add to the total cost of your loan.