A look at the differences between logbook loans and payday loans
At some point in your life, you probably have found yourself between a rock and a hard place as regards whether to go for logbook loans or payday loans when you urgently need cash. You find yourself in need of cash urgently but simply can’t make up your mind as to whether you should go for a payday loan or a logbook loan. Of course, being at a crossroad is not something to be optimistic about. It is not the best of positions to be in especially when you urgently need cash. For this reason, to clear the air and settle the debate once and for all, we are going to shed light on the subtle differences between logbook loans and payday loans.
Amount to borrow
Payday loans limit you on the amount of money you can borrow significantly. Generally, the maximum amount you can borrow on most payday loans is £1,000. This can pose a challenge especially when you are in need of a substantial amount of money urgently. On the other hand, you can apply for a logbook loan up to 70% of current official car value. This can be anywhere between £500 and £50,000. With this, you can accomplish a substantial project and sort out all your financial needs.
Secured vs. unsecured
Logbook loans are secured against your car, motorcycle or van. You simply give out your car logbook as security for the amount of money you need as a loan. On the other hand, payday loans are unsecured which means you do not have to pledge any security before you can be approved for it.
The major selling point about logbook loans is the fact that they do not attract credit checks. Your car logbook acts as security and therefore lenders do not carry out credit checks as a preamble to approval. On the other hand, considering the fact payday loans are unsecured, lenders tend to carry out credit checks to ascertain whether an applicant has a history of CCJs, defaults or arrears. If one has an incredibly low credit score, approval for a payday loan might be problematic.
Payday loan terms are generally between 2 weeks and 1 month. In special circumstances the loan term can be rolled over up to 3 months. The payday loan is normally repaid on the next pay day hence the name. Logbook loans on the other hand have a repayment period of up to 78 weeks. This gives ample time to the applicant to plan himself and make payments as he/she is comfortable. Both the loans can be repaid early if a person is able to do so.
Speed of loan access
If you compare the speed of loan access between logbook loans and payday loans, you will notice that both loans can be availed within the same day. However, the payday loan is deposited in your bank account which might slightly prolong the time you access the cash. With logbook loans, there are lenders who can avail the loan to you in cash. Consequently, the need for credit checks might slightly prolong the period of access for cash when you apply for payday loans.
In light of the differences explained above, you should be in a position to make an informed decision as to whether you should go for logbook loans or payday loans when you are in urgent need of cash.