When Should You Consider a Logbook Loan?
There are many different reasons why you might need access to money. Perhaps you’ve been ill and you need to pay your bills, or maybe your car broke down and you need to get it repaired. Logbook loans can be great options for anyone who needs funds fast, but they must be used wisely in order to be beneficial. Here are some of the times when you might want to consider them – and a few circumstances in which you should avoid them, too.
Good Times to Consider Logbook Loans
Sometimes the unexpected happens and it leaves you wondering where you’ll find the money you need to set things right. There are some instances in which lending against your car can provide you with the funds you need to keep everything on track.
1. Unexpected Repairs
Things break from time to time, and they often do so with very little warning. For example, you might experience a significant issue with your car on the way to work, your refrigerator may stop working overnight, or your boiler might stop lighting, leaving you in the cold. When these things happen, putting off repairs isn’t really an option. A v5 loan can give you access to the money you need for repairs or replacement.
All too often, companies go out of business and close their doors, leaving people without a source of income for quite some time. Although getting a v5 loan without income is difficult, it is possible to take out this type of loan once you’ve started working again so you can catch up on your bills and avoid potentially expensive late payment fees.
3. Debt Consolidation
Credit card debt can pile up quickly, and the interest alone can eat up a significant chunk of your monthly income. If you find yourself barely managing to make your minimum payments on time, then a loan could give you the chunk of money you need to pay off those credit cards for good. Rather than multiple monthly payments that barely make a dent in the principal balance, you’ll have a single payment that is simple and affordable.
4. Injury or Illness
Being sick or injured is bad enough, but being unable to go to work due to it is even worse. If you find yourself behind because you had to take some time off work, a loan is a great way to help you pay your bill collectors and avoid potential late fees.
When to Avoid Logbook Loans
Just as there are some excellent times to consider this type of loan to help you get out of (or even avoid) debt, there are also some times when it may be best to shy away from them.
1. When you can’t afford the monthly payments
Loans against your logbook are secured by the value of your car, so if you can’t afford to repay the monthly payments as scheduled, your lender can take possession of your car, leaving you without means to get back and forth to work. If you won’t be able to afford the payments, don’t take one out.
2. When you want to make a frivolous purchase
It’s always nice to take a vacation, and you might really want that ultra-high-definition television being advertised at your local electronics store, but it’s not worth putting your car up as security. It’s best to save logbook loans for when you really, truly need them, such as in emergency situations.
3. When you have other ways to access money
Pulling money from your savings account to cover unexpected expenses can be a bit disheartening. After all, it probably took you a long time to save that money. However, it’s a better option than an interest-bearing loan secured by your car. For example, if you need access to £2000 and you have it in your savings account, you can pull it from that account without any interest and repay it as often as you’d like. When lending against a vehicle, you’ll find yourself paying interest with each payment and you’ll have to repay your loan on a set schedule.
As you can see, there are times when a logbook loan can help you avoid significant financial woes, and there are other times when these loans can actually be the cause of your troubles. Understanding how they work and when you should consider them can help you make better choices about your financial future.