Logbook Loans or Payday Loans?

If you have bad credit then you can choose between logbook loans and payday loans.  They are both loans for people with bad credit but there are some big differences in how they work and what they will cost you.

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.

 

 

Disclaimer: A logbook loan is secured on your vehicle. Your vehicle is at risk if you do not keep up with repayments. CompareLogbookLoans.co.uk is not a lender and does not give financial advice. All loans are issued by third parties.

Tags: Logbook Loans, payday loans