If you have reached the point of seeking a logbook loan, the chances are that financial troubles have set in. Many people turn to logbook loans because they have a very poor credit score that hinders them getting conventional credit. With a poor credit score, no bank wants to take the risk because they fear you will default.

One of the alternatives taken by most people is going for logbook loans.  The loans are advanced against your car. You temporarily transfer the ownership of the car until the entire loan is cleared. However, you are entitled to use the car as long as you continue making the agreed monthly payment.

The rising demand for logbook loans in the UK has made a lot of lenders to enter the market. Consequently, picking the right logbook loan company has become a very difficult task. To be sure of dealing with the right logbook loan company, here are five components you must check.

Low Annual Percentage Rate (APR)

The main distinguishing characteristic of logbook loans is high-interest rates. Most lenders in the UK have very high-interest rates that reach up to 400% APR (annual percentage rates). A good logbook loan company should have lower APR compared to competitors. You should follow a number of lenders to establish the one with the lowest rates.

Do not stop at checking the APR. Extend to other components of the loan that can raise the overall cost of the loan. For example, the lender should not attach penalties for making an early payment. As far as you clear the entire loan, there should be no charges for early repayment.

Commitment to assisting clients

Once a client takes the logbook loan, it does not mean that he cannot fall into another trouble. If unavoidable circumstances emerge along the way, a good lender should be there to listen and help. If the borrower’s income goes down because of unavoidable circumstances, the lender should be there to advice on possible areas of austerity. For example, you can be advised to use public transport and leave the car at home or carry packed lunch to avoid going into the hotel every day. The cash you save should be directed towards clearing the loan.

If the ability to repay the loan diminishes completely, the lender should be there to provide expert assistance. Think of a borrower who losses a job several months after taking a logbook loan. If the borrower does not get another source of revenue, there is a risk of defaulting and incurring a lot of penalties. The lender should be there to assist you to make a great decision. For example, the borrower can be advised to sell the car immediately so that the loan is cleared and the remaining cash returned to him.

Flexible repayment requirements

A good logbook loan company should have flexible repayment policies for borrowers. While you might have prepared well to meet monthly remittance, some issues beyond personal control can arise. For example, a delay in the salary can make you get late with several weeks. This should not be a reason for penalizing borrowers and recovering their cars. The lender should have a flexible repayment policy for borrowers. He should even have room for negotiating the amount to be repaid every month.

Final take

The lender you select to borrow a logbook loan is a crucial determinant of how smooth the repayment period will be. Though you might be under pressure to borrow from the first lender, it is advisable to scrutinize them so that only the best is selected. If you get the best lender, the chances of emerging stronger financially are very high.