Is going for a logbook loan the solution?

When all is said and done, the truth of the matter is that having a poor credit rating can never be okay. I understand that many people say this to feel good about themselves but going by the number of disadvantages associated with having a bad credit rating, there is nothing good about having bad credit. You only get to understand this when you are pressed for cash or a phone contract and no one is willing to accommodate you. You feel as if the world has conspired to lock you into a mechanical mode of reaction impossible to resist.

You’ve approached countless lenders and each time the answer is “we are sorry but we can’t approve your application at the moment”. You are dejected, feel unworthy and feel as if you are being hanged to dry on a matter you had no control over. Then you hear about logbook loans and your curiosity is piqued. You even become more vested when you learn that your credit rating is of no consequence in the approval process. You heave a sigh of relief. You can’t believe how lucky you are. Your heart is beating at an unusual rate and you wonder whether it is the solution to your problems.

Well, to answer your concerns, a logbook loan can be the perfect solution to your problem and also a nightmare of sorts if not handled properly. First of all, let’s take a look at the solution aspect. The beauty of logbook loans is that the eligibility requirements are pretty simple and the state of your credit rating of no consequence. It is a secured type of loan where you basically sign over ownership of your car to the lender in return to the amount of money you need as a loan. So long as you have a car in good condition whose tax and insurance details are in order, you are almost assured of loan approval.

With that comes peace of mind, elation and an end to your financial problem. At last, you’ve found a loan product where you don’t have to grapple with the state of your credit score prior to approval. Your problem is sorted and you have a solution to whatever disturbed your mind on end. Well, all these is possible so long as you meet your end part of the bargain and promptly and diligently pay your loan on a monthly basis.

So what happens when the interest rates are so high and you seemingly can’t keep up with payments? That’s the headache, the beginning of your problems all over again. You see, logbook loans are given out on the premise that you will pay without defaulting. Falling back in payments for a couple of months could see you entering into a debt rut. Most lenders charge high penalty fees on defaults and within no time, you will find yourself deeper in debt. You have to contend with unwanted calls every now and then reminding you to pay up and within no time, you lack peace of mind.

As if that is not enough, you are constantly harbouring the fear of losing your car to the lender. Can you paint that picture in your mind? Well, to answer your question, if managed properly, a logbook loan can be a solution to your current financial problems especially if you have a poor credit rating. In fact, have been found to be quite instrumental in not only offering affordable logbook loans but also in according you professional advice on how to go about making logbook loans work for you. On the other hand, poor financial management could see you losing possession of your car. Make an informed decision! Will you?



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Dispelling myths associated with guarantor loans

No doubt, if you have bad credit, you’ve probably entertained the idea of going for a guarantor loan. With your options dwindling and high street banks unwilling to approve you a loan due to the state of your credit score, the allure of a guarantor loan might be irresistible. Though this form of loan is mostly seen as new, the fact of the matter is that it has been around for a quite a long period of time. Look at it this way. In the past, if you wanted to get a small loan from someone and was known to have a rather unpredictable repayment history, a good word from a reputable individual could tilt the scale in your favour. Guarantor loans follow the same line of thought.

A guarantor loan is in essence a type of loan where an individual with a poor credit rating can be approved for a loan provided that they present a person with a good credit rating as their guarantor. In simple terms, the loan works in such a way that should the borrower default or fail to repay the loan, the guarantor is liable to repay the loan up to the last cent. This type of loan has become quite popular no doubt but the soaring in popular has not been without misconceptions. There exist a lot of myths, false beliefs and misconceptions regarding guarantor loans. Today we are going to dispel some of the common myths associated with guarantor loans.

Myth 1: Interest rates associated with guarantor loans are exorbitant or extremely high

While there might be some semblance of truth in this claim, to take it as gospel truth without taking a look at other alternatives is foolhardy. There are indeed other types of loans that charge way higher interest rates than guarantor loans.

For instance, the average APR for logbook loans is 400%. The average APR for payday loans is 1000% and it’s not uncommon to see lenders that even charge up to 1500%. Compare that with the average APR for guarantor loans that averages 40-50% and you will understand that the assertion that guarantor loans are the most expensive is nothing more than a fallacy.

Myth 2: Guarantor loans reflect on the credit file of the guarantor

This is not true. It is imperative to note that guarantor loans are taken in the name of the borrower and the only time that they can reflect on the guarantors credit file is in the event that both the guarantor and borrower fail to repay the loan. That said, they are indeed a perfect way of repairing the borrower’s credit score if managed well.

Myth 3: Under a guarantor loan, you only have access to a small amount of money

As compared to doorstep loans or even payday loans, this assumption does not hold water. As we speak, a person can apply for up to £10,000 under a guarantor loan. This is by all means not a small amount of money. Increased competition and the need by lenders to achieve a competitive edge has seen competitive interest rates not to mention high amounts of money extend to borrowers.

Myth 4: You can only ask a family member to be your guarantor

This couldn’t be further from the truth. The fact of the matter is that you can present anyone as guarantor provided that they have an excellent credit rating and willing to shoulder the responsibilities of repaying your loan in the unlikely event that you default.

In light of the above, it is always important to have facts before making a decision that could ultimately change your financial fortunes. When it comes to loans, ensure you have all the right information and make an informed decision.

Thinking of becoming a loan guarantor? Here are the potential risks

Let’s face it. If you have a perfect/excellent credit score, there is no doubt that at some point someone will approach you to be a guarantor to a loan. In the past, the requests used to be from family members or close friends. However, nowadays, even work colleagues and acquaintances have no qualms asking you to be a guarantee to their loan. In all honesty, being a guarantor can actually help a friend or even a family member easily access a loan not to mention the chance for them to improve their credit rating in the foreseeable future.

However, as noble as your intentions might be or as much as you might want to help someone, you can’t be blind to the fact that there are inherent risks that come with being a loan guarantor. It is for this reason that this particular article endeavours to shed light on risks of being a loan guarantor.

Your future loan prospects might be in jeopardy

In principle, under a guarantor loan, you bear the responsibility of repaying the borrowers loan in the event that they default. This in essence puts your prospects of getting approved for a loan in the future in jeopardy especially if your prospective lender after making calculations decline your loan application on the basis that your income is not enough to service repayments of two loans. Note that should the borrower default on the loan, you are bound by law to repay the loan and so even though the borrower has not yet defaulted, your prospective lender will deem it as if you are servicing another loan. In light of this, you need to take this into consideration before being a guarantor.

Risk of being declared a defaulter

While you might have a good heart and guarantee someone in good faith, there are borrowers who simply take this for granted and might actually abdicate their duties to the loan simply because you automatically become responsible for the loan in case of a default. When this happens and you refuse to pay up the loan, you risk being declared a defaulter which essentially means a blot in your credit report. Being declared a defaulter could actually lead to the loss or seizure of your property not to mention your inability to avail a loan in the future.

You are tied to the loan

Granted, it’s impossible to predict what might happen in future. Your best friend now could be your worst enemy in the foreseeable future. For one reason or the other, you might not wish to be associated with a colleague, a close friend or even a family member and as such wish to be discharged from being a guarantor. Unfortunately, this cannot happen as you are legally tied to the loan for its life and any defaults by the borrower means that you have to step in and pay up. In light of this, you need to carefully think and weigh the risks before becoming a guarantor to a loan!

In a nutshell, being a guarantor is not a bad thing. However, we strongly recommend that you give it deep though before signing up for it. To reduce risk, ensure you know very well the kind of borrower you wish to be a guarantor to or simply be a guarantor to a small loan amount that you won’t face an uphill task repaying should things go south.

Sure-fire reasons why you should consider applying for Guarantor loans

The undeniable fact is, at some point, you might want cash relief for one reason or the other. This could be due to an emergency, the need to inject more capital into your business or simply because you want to make an investment. Whatever the case, when such a time comes and you don’t have a healthy bank balance, the logical thing to do would be to go for a loan. In the past, getting approved for a loan was as a simple as convincing your banker that you are up to the task and will repay the loan or simply have someone vouch for you verbally that you are trustworthy and will ultimately repay the loan.

However, as years passed by, it became difficult for bankers and financial lenders to extend credit facilities based on the word of long standing customers they are familiar with and whom they trust. History has taught them that should things go south, getting their hard earned money proved a tad difficult. It is perhaps the reason why any financial lender in the contemporary society asks for some form of guaranteed relief enshrined in law. This form of contractually guaranteed relief actually guarantees the lender of their security should the borrower default on the loan. It actually behoves on the guarantor to bear the responsibility of the loan and hence no risk to the lender.

While there exist some misgivings regarding guarantor loans, the truth of the matter is that if utilised well, the said loans have long standing benefits to the borrower. It is, in all honesty, a perfect loan instrument for an individual with a poor credit rating to get access to credit with ease while at the same time working on rebuilding their credit history. That said, with all the different types of loans in the UK market, you might be in a dilemma as to why you should go for a guarantor loan. Well, look no further as this article endeavours to shed light on the benefits of guarantor loans.

  • Faster processing and approval

Once the issue of a guarantor has been dealt with and the lender satisfied that the guarantor meets all the requirements, processing and approval of guarantor loans is fast so to speak. In fact, provided that everything is in order, you can expect to have cash in your bank account within 24 hours!

  • Longer repayment periods

In comparison to payday loans or even doorstep loans, there is no denying that guarantor loans have a longer repayment period hence offering the borrower flexibility in how they budget for their finances. With payday loans and guarantor loans only allowing borrowers a couple of weeks in repayment, guarantor loans can even stretch up to 7 years.

  • Your credit rating state is inconsequential

You probably wonder why I would make such an assertion in a world where credit scores are at the centre of everything. Well, how guarantor loans work is that so long as you have a guarantor with an excellent credit score willing to shoulder responsibility of repayment, your credit score status is of no consequence. However, this does not mean that you shouldn’t work on improving your credit rating!

  • Opportunity to boost your credit rating

With guarantor loans, you get a rare opportunity to work on improving your credit rating. The secret is of course in ensuring that you make diligent payments without defaulting. This will of course reflect on your credit report which basically means that with time, you will be able to boost your credit score.

  • Lower interest rates

Compared to other bad credit loans, it is correct to say that guarantor loans are the most affordable. With interest rates for logbook loans averaging at 400% and payday loans averaging at 100%, it is correct to say that with an average interest rate of 40-50%, guarantor loans are the most affordable!

In conclusion, while there are many other benefits of guarantor loans, the above mentioned stand out and should form the basis as to why you should go for guarantor loans as opposed to other types of bad credit loans.