How to avoid defaulting on a logbook loan
Considering the fact that we know not what the future holds, the title of this article might come across as ambitious. However, it is imperative to note that we all should ascribe to the age old adage that failing to plan is planning to fail. From the outset, it’s important to note that no one plans to fail. If it were up to us, failure would be a non-existent phenomenon. Unfortunately, this is not the case and everything is dependent on the decisions we make.
Granted, a good number of individuals in the UK default on logbook loans and a significant number have found themselves deep into debt not to mention the high probability of car repossession. Believe you me not, this is a serious problem and a major cause of depression. While no one plans to default on their loans, it is sometimes to better to plan in advance and avoid a situation where you find yourself in a debt rut. How do you minimise the prospect of defaulting on a logbook loan?
Knowledge is bliss
Forget the saying that ignorance is bliss. Ignorance can never be bliss. Ignorance is just ignorance and it will get you into hot soup. Endeavour to learn as much as possible regarding logbook loans before you take the plunge. Learn how you stand to benefit from it, how you can leverage it to improve your credit rating as well as the underlying risks. By so doing, you stand a better chance of making an informed decision and reducing the chances of defaulting.
Borrow what you need
Many people take advantage of ease of application and the fact that one’s credit score is not an issue to borrow more than they need. With the high APR associated with logbook loans, this is without a doubt a bad move. To reduce chances or even avoid defaulting, ensure you borrow what you need. If you need 3000 pounds, do not be tempted to borrow 10000 pounds simply because you can be approved for it. This creates a burden for you and increases your chances of default especially if you can’t keep up with the monthly or bi-weekly repayments.
Have a payment plan
It’s imperative that you have a plan of how you intend to service your loan. Look at your budget, your income, and your expenses and ask yourself whether you will be able to service the loan whilst meeting all your basic needs. The fact of the matter is, you can’t stay hungry and pay off a loan. Do not bite more than you can chew. Look at your income and budget accordingly. By so doing, you will greatly reduce chances of defaulting on your loan!