Is your bad credit reducing your lending options? Are you in need for some quick cash and willing to keep your car as collateral? If you are, then you need to consider these tips before making any final decision. Logbook loans may sound attractive and safe. However, with extremely high interest rates and the chance to lose your vehicle, the risks are greater than the rewards.
Therefore, before you opt for a logbook loan, consider some of these alternative options.
1. Seek assistance from friends or family
One of the best and the safest lending options out there is to borrow from someone you know personally. Your friends and family know you and trust you. Borrowing from them has many advantages. Firstly, you can borrow at relatively low interests rates or no interest rates at all, although it’s better that the people who are helping you should make some profit out of the transaction. Another advantage is that you don’t have to go through the institutional processes of having to register for a loan. Just a written agreement will suffice.
Even though borrowing from friends and family is a safe option, you shouldn’t be too complaisant about paying them back. Losing a valuable relation in exchange for a small sum of money is a very bad bargain indeed.
2. Use a co-signer to secure a loan
If your friends or family do not have the cash to lend it to you, they can still help you in other ways. If they know you well enough and trust your ability to pay back the loan, they can co-sign the loan with you. This means that you can use their good credit to assure the lender and secure the loan on low interest rates.
Here too, you need to bear in mind an important consideration. When you borrow with the aid of a co-signer, the payment details are recorded on both your credit reports. This means that any lag on your part can ruin their good credit which allowed you to borrow in the first place.
3. If the banks don’t agree to lend, a credit union might
One of the best alternatives to borrowing from a bank is borrowing from a credit union. Credit unions are similar to banks, but the only difference is that they’re owned by the members. So, if you’re a member of a credit union in the UK, you can easily borrow around £100-1000 at significantly less interest rates than logbook loans.
4. Cash advances never fail
Another simple method to borrow money is to ask for a cash advance on your payroll from your employer. Some companies also offer employee loans at lower interest rates. If you have that facility, then go for it by all means. However, if not, you can ask for a cash advance from your next payroll.
5. Try peer to peer loans
Peer to peer lending is another, much more affordable, lending option. The difference, here, is that you’re borrowing from individuals instead of institutions. This leads to a significant reduction in interest rates compared to some of the other lending options. The average interest rates for a P2P loan falls somewhere between 6-10 percent. Compared to the 400 percent APR on logbook loans, it’s a much better option.