These lenders by law have to give you examples of representative APR etc but it is difficult to compare things like logbook loans because they all have their own APR rates and repayments terms.

They also use different loans amounts and repayment schedules in their own examples of charges you can find on their websites.

Which is the best loan calculator to use?

However, if you use the Guardian’s online loan calculator you can work out if you can afford the monthly repayments, and you compare loans before choosing which company to apply to.

The Guardian Money Unlimited loan calculator looks very cheap and nasty but it is actually very quick and easy to use, and far more flexible than other loan calculators I have found online.  The problem with most loan calculators is that they only give you options of repaying over 12 months or more and the benefit of logbook loans is that you can repay them over shorter time periods such as one month.

This calculator helps you determine how much you will have to pay on loans of different sizes and interest rates.  There are blank fields for you to enter for:

• the amount of the loan
• the representative APR rate
• the repayment schedule e.g. monthly
• the number of repayments e.g. 12 if over a whole year

You are then given a loan repayment schedule letting you know how much it will cost you.  For each repayment you would be due it lists the balance, the interest, the principle and the payment for that installment.

For example, the loan repayment schedule it gives you will look something like the following (but of course, you’ll need to add in your figures for the real amounts!)

Pmt#     Balance           Interest          Principal          Payment
1.          1,000.00            297.00             251.31             548.30
2.            748.69             222.36             325.94             548.30
3.            422.75             125.56             422.75             548.30
Total interest = 644.91

As you can see it automatically works out the amount of money you’ll need to pay each month and how much of each installment is for interest, and how much is paying back the principal.  This is very useful for quickly comparing the loan terms offered by the different lenders.

How do I use the logbook loans calculator?

This loan calculator is actually very simple and easy to use, and doing a comparison of all the main lenders will take you no time at all.  Here are a few quick action steps to get you started:

1. Enter the loan amount you wish to borrow in the first box.
2. Enter the representative APR interest % in the second box (you can find this on the lender’s own website.)
3. Choose “monthly” from the drop-down menu.
4. Choose how many months you want to make repayments over (e.g. 3 for three months, 12 for one year.)
5. Click “calculate” to see the loan repayment schedule.
6. Repeat with a different lender to compare loans.

Once the bill of sale is in place the lender can accept people with a bad credit history – you will NOT have to do a credit check.

What is a ‘bill of sale’?

A bill of sale is a legal document that evidences the transfer of title to personal property from a seller to a buyer.  It reports that at a specific time and place, for a certain amount of money or value received, the seller sold the personal property to the buyer, and that having lawful possession of the item he was legally entitled to do so.

The bill of sale document itself may have a general structure similar to this:

“For the sum of £10,000 I hereby sell to John Smith full ownership of a blue BMW car, registration number xxxxx. (signed) Andy Jones.”

This financial instrument is used to convey title to personal property, either absolutely or by way of security (on a loan, for example.)   This is where it relates to financial services such as logbook loans and other secured loans.  A logbook loan is secured on your vehicle, and the loan amount available depends on the market value of your car.

This means that lenders are happy to lend to people with bad credit because they now have an asset backing up the money in the event of a default.  The flip side of this is that if you fail to repay the loan then the lender can use the bill of sale agreement to seize and resell your vehicle.  This educes the risk to the lender of not getting their money back.

There have been a number of Acts of Parliament relating to bills of sale.  These were designed in order to prevent fraud (for example the seller might sell the property with a bill of sale to a 3rd party without telling them it has a bill of sale attached.)  The initial Bills of Sale Act in 1878 has been updated several times, the last time being the Bills of Sale Act 1891.

Logbook loans and the ‘bill of sale’

Here is a quick overview of the whole process, from applying online to repaying the loan.  This is just for general illustration only, each lender may have a slightly different process so you’ll need to check their terms and conditions directly.  But as a rough rule of thumb here is how it works:

1. You apply online at the lender’s own website for an instant decision in principle.
2. The lender calls you back to agree terms and confirm that you qualify.
3. You meet the lender in person, either at a local branch or they can do a home visit.
4. You sign the loan agreement and the bill of sale document.
5. They give you your money there and then, by cash, cheque or bank transfer.
6. The lender holds onto your V5 logbook until you pay back the money.
7. You keep your car, with full rights of use, and drive at as normal.
8. Once you have repaid the loan in full the bill of sale is cancelled.

Further information

Please remember that CompareLogbookLoans.co.uk does not give legal advice or financial advice (see our disclaimer.)  Therefore you will have to do your own research before entering into one of these agreements.  These logbook loans do give extra options to people with bad credit, but this is balanced by the fact that you must be prepared to use your vehicle as security.  This requires you to sign a bill of sale agreement when you take out a loan.

Here are some useful links if you want to do some further research:

Financial Services Authority

Office Of Fair Trading

Citizens Advice Bureau

Compare Logbook Loans

1.  You can borrow much higher amounts of money with logbook loans.

The lenders will lend from £200 to £50,000 depending on the value of your car.  Payday loans on the other hand tend to only be available from £80 to £750.  The reason for this difference is that logbook loans are secured on your car – the more your car is worth the more cash you can borrow.  If you fail to repay a secured loan then the creditor can claim the asset it was secured on (in this case a car).  With payday loans the loan is unsecured meaning that is you default the creditor has a general claim on all of your assets.

2.  You will never need to go through a credit check with any of the logbook loans lenders.

Both logbook loans and payday loans are available to people with bad credit, and both accept borrowers who have been refused credit in the past.  Although most payday loans companies do not have a credit check there are in fact some, such as Wonga, which do make you do one when you apply (in fact they actually turn away around two thirds of applicants.)  The logbook lenders reduce their risk by securing the loan on you car rather than by checking to see if you are creditworthy in the way your bank would.

3. You can get a logbook loan paid to you in the most appropriate way, according to your situation.

For example, most lenders will let you choose between cash, cheque, or bank transfer, so there is no need to have a debit card or bank account to get a logbook loan.  You will receive your money there and then when you sign the loan agreement.  With payday loans on the other hand you will normally need to have a bank account and debit card for the money to be paid into electronically.

4. You can choose much longer repayment periods with logbook loans.

Some UK lenders will give you up to 3 years to repay the loan, and will often let you make repayments in cash.  Payday loans buy definition are until next payday and therefore must be repaid over a month.  The lenders will let you roll-over the loan into the next month but the interest will start acummulating if you do this.  The logbok loans UK lenders will also let you pay over a short time period such as 1 month, and they often have no fees for overpayment and may give discounts for early settlement.

5. The % APR interest rate is lower with logbook loans.

Representative APR is calculated over the course of a year – by definition – whereas both logbook and payday loans are often issued and repaid over much lower time periods such as a month or two.  This skews the representative APR figures and makes them appear higher than they actually are.  In any case, the logbook loans APR rates are lower than the payday lenders rates, so you may pay less in charges.  With logbook you can get less than 357%, whereas with payday you can expect around 1,737% with the UK’s leading lender.

For more information you can compare logbook loans and apply online for an instant decision.

Finding reliable debt advice can be difficult because many companies and organisations are pushing their own agenda.  However there are several UK charities and government funded agancies dedicated to helping you manage your money better.

It is always best to speak directly with qualified debt advice people before making any decisions.  Please see our related article about the top 10 free UK debt advice websites and charities.

There are also many good ideas to be found online.  We’ve searched the internet to find the best debt elimination tips to help you get you out of the red, and back in the black!  They range from general mindsets regarding personal finance, to specific techniques for saving money.

Here are links to some useful articles that add up to give you 100 ways to get out of debt.

1. Top UK financial comparison site uSwitch has an interesting article on 7 ways to get out of debt:

http://www.uswitch.com/debt-help/7-steps-to-get-out-of-debt/

2. The UK finance advice site This Is Money explain 10 ways to get out of debt:

http://www.thisismoney.co.uk/money/cardsloans/article-1585573/How-debt.html

3. Leading telecom company Talk Talk also have a good article on 10 ways to get out of debt:

http://www.talktalk.co.uk/money/latest-features/loans/beat-debt.html

4. Personal productivity site Zen Habits has a huge list of 73 debt elimination tips suggested by readers:

http://zenhabits.net/73-great-debt-elimination-tips/

Well now you can.  And not only that but you can also track your monthly spending, set household budgets, and see all of your transactions and balances together at the same time, so you’ll always know exactly how much money you have, and never need to wory about accidentally going over your overdraft limit or missing a payment.

There are now some great free online budgeting tools available to people in the UK.  These are secure websites which link together all of your bank accounts, credit cards, utility bills etc an display them in a single dashboard to help you manage your money.  They automatically create beautiful graphs and overall balances so you can check all of your finances on a single website quickly and easily.

They also give ongoing money saving tips and advice tailored to your needs, for example, letting you know about alternative products and services that might save you money.  And most importantly, they are completely free to use.

The benefits of using an online budgeting tool

• Keep all of your bank accounts, credit cards, expenses etc in one place
• See all transactions and balances for every account all at once
• Track your spending on a month to month basis
• Sort your spending into categories e.g food, clothes, utility bills etc
• Identify where your money goes and where you can make savings
• Compare income and expenditure using graphs and charts
• Set budgets for the month based on realistic money available
• See you progress throughout the year, stay up to date with savings
• Find ways to save money on regular bills like mortgage/rent, car , insurance etc
• Get deals on finance products and services
• General money saving tips and strategies
• Never miss a payment or go over your overdraft again
• Plan ahead for holiday season and avoid last minute overspend

So, what’s the catch?!

So you might be wondering just exactly how these websites make money then if their users get to use them for free?

Well, the answer is that because these free tools automatically look for ways to save you money, they need to let you know about other companies that have cheaper products than he ones you are currently using.  They receive a small commission from these finance companies when the send them new customers, but every one of the fre tools we recommend is adamant that they only recommend what they believe to be a good deal, it is entirely up to you what to do, it’s your money!  However, don’t worry, there is NO obligation to change anything if you don’t want to.

Top 3 Free Online  Budgeting Tools (UK)

Here are the top 3 free online tools we’ve found for budgeting and money management.  We are not getting get paid for recommending these companies to you, and there are no hidden charges to worry about once you join, we just think they’re good!  Click on the pictures to visit each website…

1. Money Dashboard

2. Love Money

3. All My Plans

You’ll find links to 10 of the best debt advice charities and organisations dedicated to helping you get on top of your money problems quickly and easily.

Many of these are charities and government funded organisations, but as with everything you’ll need to do your own due diligence before accepting advice.

1. Credit Action

This is a national money education charity since 1994.   They give debt advice,  budgeting and money saving tips, as well as publish monthly statistics on personal debt levels in the UK. Useful tools include a “spendometer”.

2. Citizens Advice Bureau

Network of local charities which gives free confidential advice on financial, money and legal issues affecting people’s lives. They also work to influence changes in legislation to benefits consumers. This site has links to your local CAB office where you can get independent advice on debt and other problems.

3. Advice Guide

This is the Citizens Advice official online advice guide. They give advice on everything including debt, tax, benefits, utility bills, housing, legal issues and money management. They will help you understand your rights and entitlements better, and help you get out of debt.

4. National Debtline

A free confidential and independent debt advice telephone service with separate offices in England & Wales, Scotland, and Northern Ireland. They also have a useful online tool called My Money Steps which will give you a personalised plan to help you deal with your debts. They also have a dedicated business debt helpline.

5. Consumer Credit Counselling Service

A debt advice charity since 1993, they give advice on moneymanagement, debt help, bankruptcies and will help you get on one of their popular debt management plans. A useful online tool is their CCCS Debt Remedy service which provides anonymous debt counselling over the internet.

6. Money Advice Service

This is a free and independent financial advice service set up by the Government using a levy on the UK financial industry. They have a useful online tool called “Health Check” which which takes about 10 minutes and gives you free personal money advice. They also have some useful comparison tables and guides to look at.

7. Money Saving Expert

Helps people save money in all areas of life, prides itself on helping you beat the system. This site has a great forum community discussing all sorts of topics with various experts on hand to help answer your questions. They have lots of deals and vouchers to help save you money.

8. Consumer Action Group

Free forum offering advice on consumer rights issues, especially unlawful and unfair charges by banks. You need to register to get full access to all the discussion boards (it’s free) and the layout is a bit messy but there are likely lots of people in there going through similar problems to you.

9. Get Out of Debt Free

A not-for-profit website which offers alternative advice to consumers, which often goes against what the Citizens Advice and financial advisers say in general. This site argue that that the financial system is fraudulent and offer advice, tips and letter templates to for people to use when dealing with their debt.

10. This Is Money

This is the UK’s most popular financial and consumer news website, it’s run by an independent editorial team of experts. As well as analysis of news stories and predictions for the future they give debt advice and tips on on how to save money and make money. They have an excellent blog filled with the latest news and events.

Believe it or not, your credit score says a lot about you. It confirms your financial stability and your ability to keep your word. Most importantly, it signifies if you’re economically responsible and able to be trusted for future financial endeavors.

The inability to pay loans and bills in a timely manner usually causes damage to your credit score. Regardless of the reasons behind your low score, most sources that are beneficial to your welfare and mobility find ratings that are substantially low unacceptable. Poor credit scores ultimately make or break your chances of qualifying for loans, car purchases, or property investments. They also increase your interest rates on credit cards, and may even hinder your chances of securing employment.

10 Ways to Improve Your Credit Rating

The most trustworthy people are sometimes unable to avoid financial hardships that hurt their good standing with credit bureaus, especially during global economic downturns. Fortunately, there are ways to repair credit scores. Take a look at some steps that may be useful to better your chances at financial security.

1. Report Discrepancies

Credit bureaus aren’t above making mistakes. You should monitor your credit report regularly to check for errors that drop your score lower than it actually should be. The kind of miscalculations that you should look for include, but aren’t limited to, old lawsuits that have already been judged, obsolete bankruptcies, spousal debts, duplicate listings, unauthorized hard inquiries, old demerits, and wrongful tax liens.

After you check your free reports at Annual Credit Report.com, you can dispute inaccurate entries on your report by filling out a special form on the website.

2. Limit Credit Applications

It’s important to only apply for credit when you absolutely need it. You should examine the fine print (i.e., interest rates and fees) of new credit endeavors before agreeing to the terms to avoid being overcharged and committing to something that you’ll regret later. Shopping for the best rates and loans is undoubtedly essential to restoring and maintaining a healthy score.

3. Make Payment Arrangements with Your Creditors

Despite common beliefs, creditors aren’t completely unremitting; they’re concerned with getting the money you owe them in a timely fashion so that they can stay in business. You should try to negotiate with your creditors to avoid having late payment history added to your credit report. More than likely, they’ll be willing to work with you after you’ve voiced your circumstances and your willingness to cooperate.

4. Stay Away from Excess Inquiries

An inquiry is the act of someone checking your credit history. Each time a new source, such as a retail stores or banking institution, makes an inquiry, it lowers your credit score. Hard inquiries are performed by businesses to see if you qualify for their product or service, whereas soft inquiries are made for other purposes, such as employment matters. Credit checks, particularly soft inquiries, can remain on your credit report for up to two years. Multiple inquiries within a short time frame can drastically worsen your score unless they’re made while you’re looking for a car or house, as several inquiries on your report for one of these purposes will only count as a single inquiry. However, the multitude of similar credit checks must be within a 30- to 45-day period.

5. Keep Inactive Accounts Open

Whether you’re active with a creditor or not, bureaus will keep your credit history in good standing the longer your account remains unclosed. If you have credit cards that you no longer use, it’s best to hide them or cut them up and dispose of them rather than close the old accounts. Keep in mind that you want to avoid having more than a handful of unused accounts open at one time.

6. Get Rid of Your Ex-Spouse’s Accounts

Divorce can cause a rift between two people in several ways, particularly a financial disaster if the couple decides to combine their accounts for record-keeping purposes. After separating from your partner and the divorce is final, it’s important to remove the other person’s name and information from your existing accounts and pay off joint accounts that you intend to close. Still, remember that getting a legal divorce doesn’t make you or your ex-spouse exempt from paying your debts, and you should discuss who will be responsible for successfully fulfilling each financial obligation.

7. Don’t File for Bankruptcy

Avoid filing for bankruptcy at all costs, as it completely destroys your rating and can take years to re-establish good credit. Although it may sound like the most feasible option after enduring economic difficulties, you should consider the amount of time it’ll take to rebuild your credit, as well as the likelihood of being rejected for loans and other credit features. It’s best to meet with a personal financial consultant to cover other possibilities before making this drastic leap.

8. Maintain Low Credit Card Balances

The advantage of using credit cards over cash or checks is noticeable. However, it’s crucial that keep your balances on your open accounts low to avoid getting bad marks on your credit score. According to Entreprenuer.com, the general rule is to not let your balance exceed more than 35 percent of your entire credit limit.

9. Don’t Transfer all Your Credit Card Balances to One Card

Consolidating your credit card balances to a single card may help you avoid sky-rocketing interest rates, but it can also wreck your rating. Alternatives include refinancing options or paying off debts on several low-interest credit cards.

10. Pay Bills in a Timely Manner

The best way to improve your credit rating is to pay creditors on time. This strategy will not only help boost your score, but will shed past debts quicker and maintain a good relationship with current creditors.

Enhancing Your Knowledge of the Credit Process

Although it benefits most individuals to have a general understanding of their credit rating and how it’s affected, those with a keen interest in learning more behind-the-scenes knowledge should consider a career in finance or accounting. Aspiring professionals in these industries can receive higher education in multiple ways, such as obtaining a finance degree online or enrolling in an online accounting degree program that suits their needs and interests.

When you apply online you are only asked for basic details about yourself and your vehicle.  The amount of money you can borrow depends entirely on the value of your car and not on on your credit score.

Why are logbook loans so popular?

Many people have been refused repeatedly by other lenders in the past and are unable to borrow money through the traditional routes. Whenever they apply they fail at the credit check stage.

The credit crunch and recession have caused the banks to tighten their lending rules considerably, which in turn means that more people are being refused credit than ever before. There are also some people who aren’t sure if they have a good enough credit rating to get money from the bank, but are too scared to apply just in case they fail the check and make their rating even worse.

This makes logbook loans attractive to many people with bad credit, but it doesn’t mean that they are the perfect solution for everybody. You’ll have to do their own due diligence to make sure it is the right thing for you personally.  For more information please see our frequently asked questions.

What is a credit check?

The reason banks and financial institutions run a credit check on potential borrowers is to verify that they are good for paying back the loan, in full and on time.  They want to know the credit history of each person to work out the probability of them repaying their debts.

Your credit score is based on a thorough statistical analysis of your credit history and is expressed numerically.  This allows them to quickly rate your creditworthiness in an objective way.

Lenders get these reports from credit agencies.  Citizens in the UK have the right to see their credit files for £2.  Many individuals like to look at their own records before deciding whether or not to apply for a loan or credit card in the first place, as all further applications for credit are recorded in these files for future lenders to look at. 

This score is developed from the person’s behaviour and activities in applying for credit and paying back loans and debts in the past.  There is a strong statistical correlation between these scores and the person’s actual likelihood of repaying the loan as agreed.  From the lender’s point of view it is better to simply rule out people determined a risk using this method rather than risk lending to them and not getting their money back.

What does a this mean for people with bad credit?

One of the main issues facing borrowers when applying for credit is that it is not possible to know in advance whether or not they will be successful.  In this case you might want to view your own credit report from an agency like Experien.  Each lender has their own policies about where the cut off point is, or  the “credit score head” as it is known.  The whole process is very complex and difficult to pre-empt, even for experts.

Another factor is that lenders simply do not need to reveal their minimum credit score to anyone so the borrower has no way of finding out what the differences between lenders are and to work out which is the best company for them to apply to in the first place.  The lender does not even have to tell someone why they have been refused.  This means that an individual cannot shop around for the company where they are most likely to pass, they simply have to leave it to chance due to lack of information.

What do I do next?

You can order your £2 credit report from Experien.

Find out 10 ways to improve your credit rating

Read more tips on how to improve your credit score at Money Saving Expert

See if you qualify for a logbook loan and read more about how they work

Compare the top logbook lenders offering loans for people with bad credit

]]> http://www.comparelogbookloans.co.uk/what-if-i-have-bad-credit/feed/ 0 http://www.comparelogbookloans.co.uk/how-much-is-my-car-worth/ http://www.comparelogbookloans.co.uk/how-much-is-my-car-worth/#comments Wed, 19 Oct 2011 13:48:55 +0000 admin http://www.comparelogbookloans.co.uk/?p=2054 How much money you can borrow depends on how much your car is worth.  Most lenders let you borrow up to half the market value of the car, so the more your car is worth the more money you can get.

Because these are loans secured on your car the lender won’t need to perform a credit check, so it won’t matter if you have bad credit. What they do instead is calculate the value of your vehicle based on the information you give them regarding its make, model, age etc. This is done online or by phone.

You’ll get a free car valuation from the lender when you apply, but you also might like to check for yourself in advance.  Here are some websites that will help you find out how much your car is worth:

Parkers have a free online calculator as well as publishing the Parkers Car Price Guide.

What Car? have free valuation tools and a team of experts who revise the prices monthly.

We Buy Any Car will give you a free online valuation on their website.

The value of any asset is determined entirely by the price someone else will pay for it, so how much you paid for the vehicle is irrelevant to the lender.  All they want to know is how much are cars like those selling for right now.  The reason is that because the vehicle acts as security on the loan they need to be confident that it covers the amount of money they lend you.

In the event of a default the lender can seize the car and resell it to recoup the money still owed. This means that your vehicle is at risk if you fail to keep up with repayments.  The flip side of this is that they will lend to people with bad credit as long as they own a car.  You also need to be over 18 and live in the UK, go here to find out if you qualify.

Why can I not borrow up to the full value of my car?

Lenders usually only let people borrow up to half the value of the vehicle. This is because of the costs and logistics involved in repossessing and reselling a vehicle.  There are legals fees and bailiffs to be paid, and finding a buyer can take time. They are also not guaranteed to get the full price it was valued at when you applied.

Contrary to popular belief it is actually in the lender’s best interest for you to pay back the loan as agreed in your loan agreement.  That means they can focus on finding new customers rather than chasing up the small minority of people who default on their loan.  They make their profits from taking a risk on people with a history of bad credit and charging them premium interest rates for the privilege.

At the time of writing most of the top lenders are members of the association and signed up to the code of practice.  Those lenders who are signed up will have logos and information on their own websites displaying their membership.  You can find out more about the association and its work using the link above.

The code deals primarily with what are known as “bills of sale” for lending.  These are regulated under the Consumer Credit Act.  The current code of practice covers several issues related to logbook loans lending and bills of sale.  The main topics are:

1. Compliance and monitoring
2. General and specific obligations
3. Advertising and marketing
4. Responsible lending
5. Explanations of the credit product
6. Assessment of affordability
7. The regulated Consumer Credit Agreement
8. Guarantees
9. Bills of Sale
10. Dealing with customers with financial difficulties
11. Debt collection and enforcement
12. Third party purchasers
13. Debt collection agencies
14. Data protection and confidentiality
15. Complaints procedure
16. Prevention of fraud and money laundering
17. Formal procedures

You can read the full document here: CCTA Code of Practice.