Should You Take Out a Logbook Loan?

1f932adefc9c2a2e8227aaf900dd387dIn an ideal financial situation, you should have enough emergency funds to cover a range of unexpected expenses. You also have more money to invest in high interest investments such as mutual funds and stocks. You’re free of debt and you’re basically basking in the wonder of financial freedom. Unfortunately, reality is rarely close to what’s ideal. For most people, debt is a perpetual problem. A large majority of consumers also don’t have enough savings stashed away for emergencies. If you have bad credit under your belt then you have an even bigger problem when an unexpected expense hits you right in the face.

This is where financial options such as logbook loans may save the day. When you have bad credit and you’ve been refused a personal loan elsewhere but you own a vehicle, you are eligible for a logbook loan. But should you take it?

There’s really no definite correct answer to the question. While most financial advisers will tell you to avoid the loan altogether, there are immediate situations when a logbook loan does come handy. Rather than reject the financial product as an option, you can reserve it as a last resort after you’ve exhausted cheaper alternatives.

If you think that taking a logbook loan is suitable for your situation, the next step is to understand how the product works. Below is a quick guide to logbook loans:

What is a logbook loan?

Logbook loans are secured personal loans that require collateral, in this case your vehicle, to get approved for. Since there’s security involved, lenders are not as strict as banks. Even with bad credit history under your belt, you are still welcome to avail the loan provided that you are of legal age, a UK resident and a vehicle owner. The vehicle must be free of any financing and should be less than ten years in age to be accepted.

How much can you borrow?

With logbook loans, the amount of money you can borrow is more flexible thanks to the require collateral. In general, you can borrow anywhere from £500 to £50,000. Most lenders will also let you borrow up to 70% of your car’s official trade value.

How long do repayment terms last?

As for repayment terms, you can repay the loan in 12 to 36 months. You can choose to set up repayment in weekly or monthly installments depending on which is more comfortable for your situation.

What is the interest rate?

The interest rate varies from deal to deal but typically, the representative APR for logbook loans is somewhere at 400%. The steep cost is one of the reasons why experts advise consumers to stay away from the product.

Fortunately, with stiff competition is the need for lenders to lower their interest rate as a way to lure customers. If you take your time to browse through online and compare deals, you’ll likely find a simple and affordable logbook loan deal that’s not only tailored for your needs but also for your budget.

What are the risks?

Other than the steep interests, another important factor to consider when looking into logbook loans are the risks of repossession. Because the loan is secured against your vehicle, you may lose your car in the event that you are unable to repay the loan. If you do decide to go through with the logbook loan application, make sure that are fully committed to repay the loan until the end of term. Otherwise, you may end up with a worse credit score and without a car.

Things to Consider Before Picking a Savings Account

article-2391205-02E0598200000578-51_634x286If you’re planning to stash some accessible cash in a savings account, looking for one with the highest interest rate makes sense but it doesn’t cut it if you want the best deal for your money. To ensure that you’re putting your money in a good place, here are some things you need to know:

Check your debt interest rates

If your debt’s interest rates are higher than what you earn with your savings account, you might want to consider paying off your debt first. Some experts even recommend to use your savings to repay debt if necessary. But there are key factors to consider before you go ahead and do that.

Check mortgage payments

If you also have a mortgage, you’ll want to check if paying more makes perfect is better financially. You’ll have to check the interest rate if it’s higher than what your savings will charge after tax.

Consider switching bank accounts

If you think your current savings account is not giving you the best deal in terms of interest rates, switching to another bank might do the trick. In some cases, you’ll also need to switch to current accounts as they usually pay higher interest.

Choose the right type savings account

There are many types of savings account. Some are for individual consumers others are designed for couples. Some accounts such as the regular savings account are ideal if you are planning to set aside money each month. If you want to lock cash away, time deposits may be preferable.

Check savings protection

Not all banks in the UK are regulated or protected. If you have a substantial savings, it’s important to remember that UK-regulated accounts only protect up to £85,000 in savings per person is safe. Remembering the financial collapse in Greece, it is more important than ever to ensure that your money is protected.

3 Simple Hacks to Saving More Money

maxresdefaultSaving money may not be as simple as ABC but it’s no rocket science either. And if others can do it then so can you. Sometimes it’s all a matter of making little tweaks to your lifestyle that can lead to extra savings with minimal effort. If you’re ready to make changes for a better personal finance, below are simple hacks you can try.

Use cash for a month

We’ve all been used to shopping with credit cards. The habit, unfortunately, is one surefire way to overspend. If you want to save more money, you might want to try to use cash for a month. The difference between living on credit cards and cash can be astounding and you just have to give it a try to find out for yourself.

Adapt the envelope system

Since you’ve committed to using cash for all your purchases then might just as well adapt the envelope system. This system may be archaic for some but it still works like a charm. What you need to do is categorize your expenses then set aside the specific amount for each on respective envelopes.

Make realistic lists and follow through

Whether you’re shopping for groceries, clothes or anything else, making a list helps. But don’t just stop with writing a list. The more important thing is to stick with your list as much as possible. Leave room for flexibility but when shopping just bring the respective envelope to avoid overspending.

Eat healthy

Another way to save more money out of your food and medical expenses is to start eating healthy. Not only will you lose weight if you’re trying but you’ll also have a healthier wellbeing all in all. By eating healthy it also means dining out less and eating in your home more. Preparing your own lunch for when you’re at work is also a great money-saver.

Should You Pay Your Debt First or Save More?

Pay off debts

The debate between paying debt first and saving more money first continues to rage. Conventional finance wisdom tells us that getting rid of debt; especially the high interest ones is a sound financial move. It makes perfect sense considering that saving accounts often offer paltry interest rates. Rather than put your money where it’s barely earning, you’d better pay off debt that suck you out in steep interest. It’s common sense at the end of the day.

But important decisions like personal finance, however, are rarely straightforward. There are no absolutes that apply to everyone. Paying debt first may work for some but not necessarily to all. When considering two vital options such as getting rid of debt and saving, balance is the key.

In order to find the right balance between saving and paying debt, understanding your financial situation is imperative. You need to take a full look at the entire picture. How much debt do you owe? Make a list of all your debts ranking them according to interest rates. Take note of debts with the highest interest rates. Now take a look at your income. How much money is coming in each month and how much are you currently setting aside for savings? Do you have extra money you can use to expedite paying off your debt?

After looking at your situation, the next step is to set your priorities. At this point, you’ll have to choose whether paying debt before saving or saving before paying debt is better for your situation.

Paying debt before saving is often recommended when you have credit card debts with steep interest rate. If the interest of such debts is higher or double of that of your savings then simple mathematics tell you to get rid of them first. In fact, the best approach with high interest debts is to pay them off as quickly as possible.

If you have extra income you can allot for paying off debt then you should go ahead and do that. If you have savings you can use to pay off debt quickly then it’s also worth considering doing just that. The key is to get rid of the interest so you can start saving and have it earned a considerable income at the end of the day.

Those who advocate saving before paying off debt, however, may disagree and they have good points too. After all, having a substantial emergency fund to cover for unexpected expenses is also very important. Without an emergency fund, you may end up in debt anyway. So instead of using up all your savings to pay off high interest debt, the much better approach is to make sure you have 3 months to 6 months’ worth of living expenses for emergency fund before you go ahead and get rid of you debt.

Do you really need an emergency fund?

imagesWhether you’re fresh out of college working on your first job or a seasoned professional with decades of experience under your belt, no one is immune to financial emergencies. This is why financial experts have been recommending and even ardently urging consumers to have an emergency fund.

Conventional wisdom tells us to save up 3 up to 6 months’ worth of expenses that are liquid and easy to access. The money comes handy for unexpected emergencies. If you suddenly get laid off, for example, a sufficient emergency fund can save the day. At its simplest, the recommendation makes perfect sense. But looking at other factors such as inflation and interest rate, is it really that necessary?

To answer the question, it helps to first understand what constitutes a financial emergency. Financial emergencies come in many forms and it’s not a question of if it will happen but when it will hit. Some of the common emergencies include medical expenses at the top of list, vehicle expenses such as repair, home or housing emergencies, education, job loss as mentioned earlier and other unexpected expected expenses such as legal costs, taxes, pet-related and even funeral costs.

No matter your age or income, these aforementioned emergencies can unexpectedly knock on your door at any moment. Statistics say that 34% of people experience these kinds of emergencies and you could be one of them. Unless you have an emergency fund, you may find yourself in a devastatingly difficult financial situation. If you don’t ever want to get stuck in a financial rut because of unexpected expenses then having an emergency fund is imperative.

So yes, having an emergency fund is necessary no matter your age, job or lot in life. At the end of the day, it boils down to the two questions. How much emergency fund you need and where should you place your emergency fund?

How much?

Following the common convention of saving 3 to 6 months’ worth of living expenses may simplify things but it doesn’t always perfectly fit every situation. Since needs vary from person to person and family to family, it pays to calculate potential unexpected expenses based on your situation.

Start off with your medical expenses. This is where medical insurance come handy. Taking that into consideration, compute an estimate of money you need to cover for other medical expenses such as surgery, medications, therapy, etc. You’ll also need to have enough money for your car repair and maintenance especially if you have an old model. If you have high interest debts such as credit cards, it’s also time to start paying them off. With less debt, you’ll be more prepared to weather emergencies.

Considering all important factors and unexpected expenses that may affect your finances, you should be able to compute a rough estimate of the financial emergency fund you’ll need just in case.


The next important question to carefully consider is where to put the money. Again, conventional wisdom tells us to place the money in a liquid and highly accessible savings account, which again makes perfect sense.

If a financial emergency hits, the money is just right there. But there’s just one problem. Savings accounts are very stingy when it comes to their interest rates. With inflation to consider, you’ll end up with less money that you originally saved. Rather than stash it on a savings account, you might consider checking into other conservative investments with higher interest rates such as bonds. Wherever you put the money, the bottom line in any case is to always have a fund ready for emergencies.

How to Change Your Mindset About Saving

change-your-mindsetNo one is born a natural money saver. If you think you don’t have the chops for it, don’t worry because you are not alone. If saving is as easy as some touts it to be, we would all have enough money in the bank. Unfortunately, saving money is often a difficult habit to develop let alone master. But it’s not rocket science either. With the right mindset backed with a solid action plan, you can make saving money an ingrained part of your lifestyle.But first, how exactly do you change your mindset about saving? Below are some simple tips to do so:

Know the why

In order to successfully change your mindset, it all boils down to knowing the why. After all, it’s always easier to do something you are knowledgeable and passionate about. By knowing the reasons behind your money saving project, setting aside a certain percentage of your income each month won’t feel like a chore anymore. In other words, you need to have saving goals. That includes both short-term and long-term goals.

To start, list down the most important reasons why you are saving money. Think and talk about it at every opportunity. Whether you’re saving for a pair of shoes, a vacation or retirement, the trick is to always keep those goals at the back of your mind especially when you’re buying or shopping money. Doing so can do wonders to your self-control in the end.

Think of saving as paying yourself

The reasons for saving money vary from person to person. In any case, saving for most people is rarely a wonderful and life changing habit because they think of it as a painful chore. Deducting a certain percentage of your income for savings is unpleasant for many which is why many people stop doing it at some point.

To avoid the same pitfall, you need to think of saving money as paying yourself. Every time you add to your savings account, you are paying yourself for working hard. If thinking sowon’t work the trick is to balance your savings with a sensible reward. Every time you meet your saving goals for the month, you can maybe buy yourself a treat. This way, it’ll be easier to get more excited about saving because you’re also getting a tangible reward along with it.

Stop spending money you don’t have

You haven’t received your paycheck yet but you’re already spending it in your mind. Even worse is the habit of borrowing money and promising your next paycheck as payment. When you’re stuck in this kind of lifestyle, you will never learn how to save properly.

Of course, making a budget of your next pay check makes perfect sense. In fact, it’s highly recommended. Borrowing money when done responsible is also not a bad thing. But the trick is always to use your money on the necessities and essentials and not spending it first on luxuries and other unnecessary purchases.

Set your sights for the long haul

Remember those long-term money saving goals you’ve set? You’ll need to write, think and talk about it more. One of the reasons why many people fail to make the habit of saving a life long commitment is because of their halfhearted focus on the long-term benefits. Instant gratification will always be your biggest enemy. No one is immune to it but you can certainly get around it by reprogramming your mindset to see the long-term goals as more important than any pleasures you will gain at the moment.