The Truth about Logbook Loans

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Businesswoman in car

If you’re like most people, chances are high that you’ve needed quick cash at one point or another. Maybe your bills have long been overdue. Maybe you needed to pay rent as soon as possible unless you want to get booted out. Or maybe you’ve had a medical emergency and your health insurance won’t cover some of the expenses. In any case, a viable option for your quick cash needs is to get a logbook loan deal fast.

If you have good credit, getting approved for a loan should be a breeze. But it’s another story altogether if you have bad credit. Most often than not, people with bad credit are refused a personal loan because you are tagged as a high risk borrower. That leaves you little to no options when it comes to fast cash and this is where logbook loans enter the picture.

Logbook loan lenders advertise their offers with the promise of quick cash and no credit check required. In short, the financial product exists exactly for people with bad credit. But there’s just a small hitch. You may lose your car in the process if you’re not extra careful.

Considering that your bad credit has pretty much ruined your chances with a high street bank or lender that leaves you with little to no choice but check out personal loans like logbook loans. Your car, after all, is just right there and ready to become collateral for your loan.

Granted that your car is less than ten years of age and is free of any financing, you can often raise cash anywhere from £500 to £50,000 against your vehicle. Most lenders allow borrowers to borrow up to 70% of their car’s official trade value. Repayment terms may start from 12 months up to 36 months.

Looking at the surface, logbook loans indeed looked like they are attractive means to getting your cash without hassles and worries of bad credit getting in the way. For most borrowers who put their vehicles on the line, the no credit check aspect of logbook loans are what attract them to the financial product.

If you’re 18 years old or above, a resident in the UK and a car owner with bad credit, you are more than welcome to take out a logbook loan. In fact, thousands of car owners raise short term financing this way. Because there are no credit checks, approval is often speedy. You can get approved within the same day you applied and receive the money shortly after. Again, looking at it on the surface, logbook loans are life savers for most people. When you’re in dire need of cash and you have bad credit, look no further than logbook loans to save the day.

In exchange for the promise of quick cash, however, are the high interest rate attached to the loan and the risk of vehicle repossession.

When you apply for a logbook loan, your lender requires that you hand over your car’s V5 or logbook document along with other requirements like the MOT certificate, insurance details and proof of income. In essence, you are like handing over temporary ownership to your lender which means that they can repossess your car in the event that you default on your repayments. Other than repossession, there’s the issue of high interest rate. Logbook loans have one of the highest interest rates in the market typically at around 400% Representative APR.

Before signing any dotted line at the end of the day, it pays to ask the question. Is the fast cash promise really worth losing your car in the end?

How to Pay off Debt Quickly and Painlessly in xxx Steps

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Stuck in debt? You are not alone. Thousands of consumers in the UK are faced with mounting debts from credit cards, loans and overdrafts. In fact, statistics show that in November last year, the amount of borrowing has hit an all-time high in seven years at more than £1.25bn for said month.

But just because you resorted to debt at one point doesn’t mean it has to take over your finances. It doesn’t matter how much debt you owe at the moment. As long as you have the willpower and the commitment to pay off your debt, you’re in the right path. Today, we’ll also help you pay off debt faster. Below are tips and tricks you can use to expedite your journey towards financial freedom.

Stop borrowing money

One of the faster ways to get out of debt is to put a stop to creating new debt. That means no more additional credit charges, no more impulsive buys and no more buying just because you can or you want to. In short, getting out of debt fast is also about changing your lifestyle.

Remember that unless you change your spending habits, it will be very difficult to achieve any of your financial goals. Start from the heart of the matter by committing to a new lifestyle then move forward with cutting up those credit cards.

Save up for an emergency fund

If you don’t have an emergency fund yet, the next step is to save up for one. Before you can focus on paying off debt as fast as you can, you need a financial cushion in the form of an emergency fund. This fund comes handy in case you lose your job or a financial emergency pops up and surprise you unexpectedly.

As a typical recommendation, your emergency fund should equal at least 3 months’ worth of your expenses. That should cover your bills, food, transportation and other needs for the next three month. You can start setting aside a small percentage of your income, maybe 5 to 10%, for your emergency funds until you reach your goals.

Pay off debts with the highest interest

To expedite your journey towards financial freedom, you can also start paying off your debt while saving for your emergency fund. If you have a large amount of debt from several financial institutions, the trick is to make a list of all your debts. Arrange them according to interest rate with the highest rates at the top.

Kick off your getting out of debt project by paying off debts with the highest interest rates first. If you can, pay these debts as fast as you can to get rid of high interest rate out of the picture.

Consolidate your debt

To further hasten your journey towards a debt-free lifestyle, you may also want to consider consolidating your debt. This way, you can further lower the total interest rates you are paying for. You can take out a loan with lower interest rates to pay off your highest interest rates debts. When yo consolidate your debt, you also only need to focus on paying off just one debt making it even easier for you to get out of debt faster.

Stick to a realistic budget

Once you have your plan for paying off debt covered, the next step is to create a spending plan and stick to it. Make sure your plan is a realistic one. Only this way can you stick with it in the long run and make a success out of this getting out of debt quick faster.

Why Bother to Boost Your Credit Score?

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Like most people with credit cards, I have at one point or another fall prey to the lure of instant gratification. When you have a credit card handy, it’s so easy to buy things. Yes, things that you don’t even need. I know because I’ve been there and done that. After years of mindless credit card spending and irresponsible repayments, it got to a point when my credit score was eventually hardly hit.

When you have a bad credit score, what follows is a domino of financial consequences that I, myself, would never want to be faced with ever again. Bad credit is that one financial mistake you never want to commit if you plan to take out loans or apply for any type of financing in the future.

For my case, bad credit prevented me from getting approved for a mortgage loan. When I was at a point when I was ready to buy my first home, I applied for a mortgage loan only to end up rejected. My chosen provider ran a credit check and found out I have delinquencies on my credit card payments. One of my cards incurred a whopping amount of debt because of the high interest rates. This resulted in a poor credit rating that haunted me for several years.

I was left with no option but to forego buying my first home. When I spoke with my financial advisor, there was really only one thing to do. Boost my credit score. Because I really wanted to own my home eventually but I don’t have sufficient cash to buy one outright, I went on to create a strategic plan that will improve my credit rating as fast as I can.

Alongside my financial advisor, I was able to boost my credit significantly within 12 to 24 months. If you’re also in the process of boosting your credit, you might pick up a trick or two from my experience. Below are three key things I did to improve my score:

1. Checked my credit report

Before you can fix anything, you need to get to the root of the problem first. I checked my credit report for inaccuracies and errors. I went through the last 12 months and checked which parts I did wrong. Apparently, it was all thanks to my credit card debt. Because I only pay the minimum and I have missed payments, my credit score got a huge hit. There were no errors to report so that’s one less concern. I was able to then move on to paying off my bills and debts.

2. Set up reminders for all my bills

To let providers know that I am a responsible borrower, I committed to paying all bills that are considered when formulating my credit score. These include utility bills, personal loans and especially my credit cards. I also set up payment reminders so I never miss a due date again. The trick was to pay bills consistently for the next 12 to 24 months so it reflects on my credit score.

3. Paid off my highest interest rate debts

I also went ahead to reducing the amount of debt I owed by paying off the ones with the highest interest rates first. That’s of course starting with my credit card bills.

The Problem with Payday Loans

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If you’ve ever needed quick cash at one point or another, chances are high that you’ve probably heard about payday loans. These are unsecured loans offered for people with bad credit who need quick cash as soon as possible. Payday loans, in short, are advertised as answers to your immediate financial needs.

Whether you need to pay off rent or have your car repaired, payday loans are there to save the day. You can borrow anywhere from £100 to £1,000 payable in 28 days or on your next payday. Since there are no credit checks involved, you can easily get approved for a payday loan within hours from application.

Unfortunately, with the promise of quick cash is the high cost of the loan. On average, the typical representative APR for payday loans is at around 1,000%. Some lenders charge higher than that justifying it with the high risk they are taking for catering to borrowers with bad credit history. More than just paying the principal, it’s the amount you need to pay for in interest that really hurts financially.

Another danger you should be wary of is the debt trap cycle. When you take out a payday loan, the chances of taking out another loan rather than paying it off are very high. This has been observed to be true for most borrowers. Because of the high interest rate, borrowers still end up short on the next payday prompting them to borrow a high interest loan yet again to meet their personal financial needs for the month. The cycle, naturally, just repeats itself especially since most borrowers of payday loans are minimum wage earners.

Over the years, payday loan lenders have received flak from financial agencies and authorities in the UK because of unfair practices. Rather than provide quick cash solutions, they put borrowers in a very difficult spot largely because of the high interest rate. Another problem is the inflexible repayment options that cause customers to face an insurmountable amount of interest rate when they fail to pay off their debt on the next payday.

If you’re planning to take out a payday loan anytime soon, we recommend that you think twice before going through with it. Weigh the pros and cons because most of the time the convenience of quick cash is not entirely worth it if we’re going to look at the total cost of the loan.

A Promising Future for Peer-to-Peer Lending

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Peer to peer lending may not be as popular as payday loans but this type of lending has certainly carved a place in the industry. One of the earlier peer-to-peer lenders in the UK was Zopa which was started back in 2005. Ten years since starting, the lender has grown into a multi-million business. It is expected to reach the £1bn mark this 2015.

According to Zopa, the company has now catered to over 107,000 individuals offering them loan amounts for a range of personal needs like car purchase, home renovation, medical expenses and debt consolidation. The money came from over 58,000 lenders giving them a considerable average return of about 5.6% for the last ten years.

With more people seeking for affordable and accessible personal loans in the UK today, peer to peer lending has become a viable alternative to traditional loans. In fact, many consider it way better than popular options like payday loans or bank loans.
What’s wonderful about peer to peer lending is that both parties, the lender and the borrower, can benefit from the set-up. Borrowers, for example, get to enjoy a lower interest rate. Rather than resort to high cost loans like payday loans, you can try peer to peer lending which lets you borrow directly from the lender. There’s no need to go through a bank hence the lower interest rates.

For lenders, they get to also enjoy a higher return on their investment. As mentioned earlier, Zopa has paid their lenders a return of 5.6% on average. This is higher than what you can earn if you put your money in a savings account from your bank.
Considering its growth and the favorable set up for both lenders and borrowers, peer to peer lending is bound to only enjoy an even more promising future in the coming years.

Quick Guide to Finding the Best Personal Loans in the UK

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Many financial experts would tell you to stay clear from debt because that’s one way to achieve financial freedom. Unfortunately, there are circumstances you have no control of that may push you in a position where you need to resort to taking out a personal loan. When this happens, the next best thing you can do is make sure that you’ll find the best loan at the cheapest rate when necessary. To help you do exactly that, below is a quick guide you can use when shopping around for the perfect loan:

Start with how much you need to borrow

Whether you need quick cash for a car down payment, a vacation or a major investment, personal loans make a quick source of cash you can easily tap. Depending on your lender, your type of loan and your credit score, you can borrow anywhere from £500 up to £50,000 or more.

Before you can find the best loan, it is always best to start with your needs. Know how much you need to borrow so you’ll have a better guide when comparing your options.

Consider how long you want to repay the loan

Now that you know how much you want to borrow for whatever personal need you may have in mind, the next thing to do is consider the term of the loan. How long do you want to the repay the debt? How much monthly payment can you actually comfortably handle?

Repayment terms for personal loans available in the UK market generally start from a few months up to several years. If you want a cheaper monthly due, stretching the loan term longer is what you need to do. In exchange, you’ll end up paying more in interest. No matter what term you opt for, the trick is to make that your budget can comfortably handle your monthly repayments.

Look for places where you can get the right loan

A slew of lenders offer a range of personal loans. From high street banks to credit unions, building societies and online lenders, your options are diverse and varied. If you want the best rate on your personal loans, knowing where to apply is one of the keys you need to get right.

Research your options and use top comparison sites as a start. Make sure your lender has a solid track record to back them up. While you’re at it, read customer reviews and seek recommendations. The key is to cover all your bases. As much as you can, steer clear from small firms that offer too good to be true offers.

Know the pitfalls and avoid them by all means

Remember that debt of any kind is a liability. The personal loan you are about to take falls under this category. When you borrow money, one of the common pitfalls borrowers make is to delay or miss their monthly repayments. Don’t commit the same mistake by making sure that you borrow only what you need. This way, you’ll ensure you can handle the monthly repayments until the end of the terms. Also read the small print for more info on hidden fees and related loan charges.

Research interest rates

Of course, let’s not forget about interest rates. To make sure that you find the best loan at the cheapest interest rate, research is imperative. Just because one lender advertises its loan offers as the cheapest in the market doesn’t always mean it’s true. Dig deeper by knowing what representative APRs really mean as opposed to actual or personal APR. Ask questions if needed before signing anything.