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Logbook Loans versus Payday Loans

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Life is never always plain sailing. There will always be events which will occur in our lives that will empty out our bank accounts. This is just a fact of life, unless you are very rich these events can really deal a blow to our finances.

Maybe the car just gave up this morning or the refrigerator just packed up, perhaps you have just been made redundant and are having problems with paying the rent this month as you look for a new job, the list of unfortunate events that can end up costing us money can go on. All these events however ever unpleasant do happen and when they do, we all want to have them sorted quickly and with as little fuss as possible.

When we are faced with having to cope with a sudden financial demand on us, we need to know what we can turn to resolve the issues. It is common for people to put their expenses on their credit cards. If the cards are already maxed out or reaching their limit applying for a new one can take a week of so plus you have to contend with all the form filling too.

Payday loans have become very popular with many people due to how simple they are to apply for and how quick payday loan deposits are to make it into your bank account. Applying for a payday loan is much quicker than applying for a credit card. Although in recent years a new type of consumer financing has appeared with allows people to get access to funds when they really need them, and these are logbook loans.

What are Logbook Loans?

In simple terms a logbook loan is when you take out a loan and use your car as security also referred to a collateral against the loan. The more the car is worth then the more money to can borrow against the car. The lender will of course now legal own the car until you have repaid the loan in full.

What do I need for a logbook loan?

Unlike having to go to the bank to get a loan with all the paper work they require for you to fill in, questions and interviews not to mention the fact that you have to turn up in person to speak to a bank employee who will start probing into your life to find out why you need the loan which is time consuming when all you really want is to have the money to start resolving the financial issues causing you grief.

Payday loans are great in this respect as it is a very simple process to apply for one. Here at Cashute we have made the application process incredibly easy and fast and can be done in a matter of minutes.

The same with logbook loans, like payday loans log book loans allow you to apply for a fast instant loan online in minutes with the money in your bank account with an hour of having accepted the loan offer.

But unlike logbook loans where you are asked to put up collateral against the loan. Payday loans are unsecured meaning that you are not expected to put up any assets to secure the loan. With a logbook loan you are putting your car up as security. If you fail to repay the loan in full and default on the loan the lender since they are the legal owner of the car will exercise their right as the rightful owner and take the car.

The advantage of logbook loans is that provided you might the minimum requirements such as the car being less than 10 years old and the car has a full MOT it is more likely that you will be granted a loan. There are affordability checks and the lender will perform a search of your credit report to determine your credit score. This is done to ensure that you are a responsible borrower and have a history of repaying loans on time and in full.

Repayment period

Logbook loans are repaid over a period of many months or a year. Payday loans are normally loans which are repaid within the following 30 days or on your next payday. Although it is possible to take out a payday loan as a short-term loan and repay the loan over a few months. Payday loans are not as expensive as people have been led to believe since the Financial Conduct Authority placed a cap on the amount of interest which can be charged on payday loans. The daily interest cap on payday loans is currently set to 0.8% per day.

Interest rates

As mentioned above the Financial Conduct Authority has placed caps and limits on what payday direct lenders can charge for their loans. The daily interest rate cap is 0.8% and no borrower will ever repay more than twice the principle loan amount. This means that if you borrow £200 you will never be expected to repay more than £400 for the life of the loan.

Even though many payday loans show a representative APR of up to 1,200% does not mean that you are going to be charged 1,000’s of pounds in interest. For example, borrowing £100 over 30 days you will repay £125.

Logbook loans do offer lower interest rates than payday loans generally because the loan term of logbook loans Is generally longer than payday loans and logbook loans are secured loans as in the security for the loan is your car.

How much can I borrow with a logbook loan?

Payday loans are a good option if you are wanting to borrow small sums of money for short periods of time. If you are looking to borrow larger sums of cash for longer periods of time logbooks loans may be a better option as they do have lower interest rates. Repaying a larger loan over a longer period of time means that your monthly repayments would be less than repaying a larger loan over a shorter period of time.

Logbook loans are still a form of short-term borrowing and are not recommended for longer term financial debt management. What are the risks of logbook loans?

The risks involved with a logbook loan is that if you fail to keep up repayments you may have your car repossessed. Before taking out any loan it is important that you consider if you can afford the monthly repayment.

Having your car seized may mean it being more difficult for you to get around and maybe you need your car to get to work.

Are there credit checks with Logbook loans?

Yes, all loans require the lender to perform a credit check to see what your credit history is like. They want to see what sort of borrower you are, if you are responsible and have paid your loans on time and in full.

With ever loan there is risk that you might be late on a payment or not be able to repay the loan in full. This will impact on your credit score and will go on your credit report making taking out loans in the future trickier.

Debt management agencies are regulated by The Financial Conduct Authority

Many people in the U.K struggle with debts and many do not know how to start to repay them speaking to a debt advisor is one of the best things you will do along with taking action yourself by speaking directly with your creditors.

https://www.nationaldebtline.org/ and https://www.moneyadviceservice.org.uk

 

You should always seek professional advice when handling debt problems. Cashute are not licensed debt advisers and any information contained in this article should not be taken as legal advice. It is your Responsibility to seek out correct legal advice

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Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk