Logbook loans and payday loans both help you meet urgent money needs.
Which of these will you be better off going for? We find out in this
article.
With the economic downturn comes all types of lending restrictions and those with poor credit are the worst affected as they are left with few options to borrow money. As a result, many people are refused loans, credit cards, overdrafts and even mobile phone contracts.
Banks use credit reports to assess the creditworthiness of a potential borrower and based on this decide for or against lending to them. The lower your credit rating, the bigger risk you are assumed to be and the lower your chances are to be offered credit.
Come alternative lenders
The situation has led to an increase in the number of ‘alternative lenders’ offering loans to people with poor credit score. Two of the most popular products in this category are logbook loans and payday loans. As applicants are not subject to a credit check and almost anyone is guaranteed of being approved for a loan, these loans have risen in popularity. Also, because most lenders of logbook loans and payday loans operate online, money usually reaches the borrower within hours of the loan being approved; this is especially true of payday loans.
Although these loans have very prohibitive interest rates the fact that they are available to almost everyone in a credit-starved market has led to payday and logbook loans becoming very popular. These loans are definitely a relief for people with poor credit and in urgent need of money.
Merits and demerits
Now, if you are looking for an alternative loan, should you opt for a payday loan or a logbook loan?
Payday and logbook loans are much like any other loan product in that they all have their positives and negatives. It is always best to clearly understand what you are getting into before committing to any type of credit, be it a personal loan, secured loan, mortgage or credit card. The same applies to payday loans and logbook loans too, perhaps more than the regular credit products.
Apart from their availability to those with damaged credit history, the main advantage of both payday loans and logbook loans is their convenience and the speed at which they are processed. Moreover, as these are ‘no-credit-check loans’, the money reaches the borrower’s account within hours of having their application and paperwork completed.
Of the two alternative loans, payday loans are often the more accessible, as they are unsecured and so do not require any collateral on which to secure the loan. However, compared to logbook loans, they come with a higher interest rate, often upwards of 1000% vis-a-vis around 400% for logbook loans.
Thus the two comparative advantages of logbook loans are that you can borrow a higher amount if your car’s value permits and the interest rate is lower compared to payday loans. And one of the disadvantages of logbook loans is, as a prerequisite, you need to own a car, and be in possession of the V5 document (logbook) that is in your name.However, this securitisation can work in favour of logbook loans as the loan amounts are usually larger than those of payday loans. However, lenders often cap the amount lent based on what is called LTV (loan to value). So higher the value of your car the more you can borrow from a logbook lender. Typically, if your requirement is less than £500, then a payday loan may be a better option although some payday lenders often advance up to £1,000. The following table sums up the features of the two products.
Conclusion
You now have a fair idea of what logbook loans and payday loans are all about and their relative merits and demerits. As to which of these you should opt, it is up to your circumstance. Whichever credit you take, it is in your interest to make the repayments regularly and avoid unpleasant situations.
Although both products have the advantage of being convenient, one major disadvantage is that they have high annual percentage rates (APR) and so should never be considered as a long term solution to debt problems.
It is important that you determine exactly how much you need to borrow and work out which loan is best for you. But remember, these loans are only short term and are likely only to add to any long term debt problems if not used correctly.
Logbook Loan Logbook Loans
With the economic downturn comes all types of lending restrictions and those with poor credit are the worst affected as they are left with few options to borrow money. As a result, many people are refused loans, credit cards, overdrafts and even mobile phone contracts.
Banks use credit reports to assess the creditworthiness of a potential borrower and based on this decide for or against lending to them. The lower your credit rating, the bigger risk you are assumed to be and the lower your chances are to be offered credit.
Come alternative lenders
The situation has led to an increase in the number of ‘alternative lenders’ offering loans to people with poor credit score. Two of the most popular products in this category are logbook loans and payday loans. As applicants are not subject to a credit check and almost anyone is guaranteed of being approved for a loan, these loans have risen in popularity. Also, because most lenders of logbook loans and payday loans operate online, money usually reaches the borrower within hours of the loan being approved; this is especially true of payday loans.
Although these loans have very prohibitive interest rates the fact that they are available to almost everyone in a credit-starved market has led to payday and logbook loans becoming very popular. These loans are definitely a relief for people with poor credit and in urgent need of money.
Merits and demerits
Now, if you are looking for an alternative loan, should you opt for a payday loan or a logbook loan?
Payday and logbook loans are much like any other loan product in that they all have their positives and negatives. It is always best to clearly understand what you are getting into before committing to any type of credit, be it a personal loan, secured loan, mortgage or credit card. The same applies to payday loans and logbook loans too, perhaps more than the regular credit products.
Apart from their availability to those with damaged credit history, the main advantage of both payday loans and logbook loans is their convenience and the speed at which they are processed. Moreover, as these are ‘no-credit-check loans’, the money reaches the borrower’s account within hours of having their application and paperwork completed.
Of the two alternative loans, payday loans are often the more accessible, as they are unsecured and so do not require any collateral on which to secure the loan. However, compared to logbook loans, they come with a higher interest rate, often upwards of 1000% vis-a-vis around 400% for logbook loans.
Thus the two comparative advantages of logbook loans are that you can borrow a higher amount if your car’s value permits and the interest rate is lower compared to payday loans. And one of the disadvantages of logbook loans is, as a prerequisite, you need to own a car, and be in possession of the V5 document (logbook) that is in your name.However, this securitisation can work in favour of logbook loans as the loan amounts are usually larger than those of payday loans. However, lenders often cap the amount lent based on what is called LTV (loan to value). So higher the value of your car the more you can borrow from a logbook lender. Typically, if your requirement is less than £500, then a payday loan may be a better option although some payday lenders often advance up to £1,000. The following table sums up the features of the two products.
Conclusion
You now have a fair idea of what logbook loans and payday loans are all about and their relative merits and demerits. As to which of these you should opt, it is up to your circumstance. Whichever credit you take, it is in your interest to make the repayments regularly and avoid unpleasant situations.
Although both products have the advantage of being convenient, one major disadvantage is that they have high annual percentage rates (APR) and so should never be considered as a long term solution to debt problems.
It is important that you determine exactly how much you need to borrow and work out which loan is best for you. But remember, these loans are only short term and are likely only to add to any long term debt problems if not used correctly.
Logbook Loan Logbook Loans
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