Payday loans and logbook loans are both loan types that are growing in popularity, yet not many people fully understand exactly how they work. The object of this article is to explain the differences between the two types of loans so you can make an informed decision when deciding which one is best for you. They each have their merits and they also each have their pitfalls. I will start with a brief description of what each loan is and who can apply for them, and then move onto a comparison between the two.
Payday Loans
Payday loans also sometimes known as pay day loans or pay check loans are very short-term unsecured loans. They have come about as a stop-gap type of finance that is designed to help people overcome a short-term financial issue with a small injection of cash until their next payday. They can be taken out for sums of money from £85 to £750 and the cash can be paid into your bank on the same day that you apply. The application process is very simple with most of the lenders offering a simple online application form with an instant decision. Although not all lenders carry out a credit check as part of the application process some lenders have now started doing so. In order to qualify you will need to be a UK resident aged 18 or above, you will also need to be employed and earning at least £750 per month, with your salary being paid direct in to your bank account. The bank account will also need a debit card attached to it.
Logbook Loans
A logbook loan is a type of secured loan, but instead of the loan being secured on your home it is secured on your car logbook or vehicle registration document. This type of loan can be taken out for larger amounts of money up to £50,000 if your car is worth enough, and the repayments spread over longer repayment terms. To qualify for a logbook loan you will also need to be a resident of England or Wales and aged at least 18 years old. You must also own your car that is free from finance, and be able to afford the repayments. This type of loan can be taken out no matter what your credit history and there is no credit check required as part of the application process. The application process is in two parts for a logbook loan, starting with a telephone call or by completing an online application. Once the lender has received your application, they will call you back to arrange for you to bring your car and its logbook to the lenders nearest branch so they can inspect the car and put a value on it. They will then tell you how much they are prepared to offer and calculate your repayments. Assuming you are happy with the quote you will need to show them proof of your income and sign some documents, leave your logbook with them and your loan will get paid out.
Benefits of Payday LoansInstant decision, and receive your cash the same day. Loans available for small amounts. Fixed charges. No fuss.
Pitfalls of Payday LoansCan borrow a max of £750. Credit check needed. Need mobile and home telephone, also valid email address required. Loan has to be repaid in full on your next payday.
Benefits of Logbook LoansNo credit check Available with bad credit. Can be self employed. Larger amounts available. Repay the loan over a longer term.
Pitfalls of Logbook LoansYou will need to own a car to qualify. Car must be free of finance. Car will be sold if you do not repay the loan.
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