When banks decline loan applications because clients have poor credit scores, most borrowers set out looking for alternatives. Logbook loans come in handy because lenders do not factor the credit score. Besides, they are more flexible, and their loans are provided promptly.

Despite these advantages, logbook loans come with many disadvantages. Indeed, financial experts discourage people from taking logbook loans because they are very perilous. Unlike the common conventional bank loans, logbook loans come with high-interest rates of up to 400%.

Other defaulted loans largely cause the poor credit score that makes banks turn you down. Now, because the borrower is adding another loan, the chances of defaulting are very high. Many people find themselves at crossroads when they can no longer continue repaying the loans. The risks that come with defaulting on logbook loans include;

  • Very high penalties
  • Car getting repossessed
  • Further damage to your credit score
  • A lot of family stress for losing an important asset when the car is reposed

After defaulting on the logbook loan, you need to be prepared for the worst. Here is what you can do to avert the situation. In fact, consider taking these measures as soon as possible in order to remain in control.

Reach the lender immediately to discuss/ renegotiate your repayment terms

While the logbook loans have earned a very bad name in the eyes of the public, you will be very surprised to note that many companies are willing to assist. Most of these companies are interested in making cash and not incurring additional logistics to tow vehicles and ensuing court battles. Therefore, reach the lender immediately you sense some financial difficulty, to renegotiate the terms of the loan. If the monthly repayment was set at £70, but you can only afford £60, your lender will be willing to listen and adjust. However, additional penalties might be levied.

Consider making the lowest repayment requirement for other lower risk loans and redirect the extra cash to the logbook loan

If you are already servicing other loans, it is important to review the level of risk involved. For example, if you have an unsecured bank loan, it will only accrue additional interest if you default. In fact, the interest rate for defaulting such a loan for a couple of months is less compared to a log book loan. By meeting only the minimum repayment requirement for other less risky loans and redirecting additional money to clear the logbook loan, the car will not be reposed. The lender will even allow you to recover the months you had lost.

Get expert advice about the situation

Defaulting on logbook loan is a major problem that should never be taken lightly. You need help. Do not keep all the stress on yourself; make the right move by talking to an expert. Most of the experts have handled situations worse than yours and, a solution will be forthcoming. Some common advice from experts may include the following;

  • Making some saving by riding to work as opposed to driving: This option will not just help you make some savings, but will additionally make you stay fit. You could cut further costs by cancelling the gym subscription.
  • Carrying your lunch as opposed to buying from a cafeteria: Preparing personal food allows you to take care of the nutritional value and stay healthier.
  • Subscribing to movies channels and watching from home as opposed to going from theatres: While this option is rarely utilized, the truth is that the options are more and entertainment very enjoyable. You cut on transport costs and ticket fees by selecting this option.