The Difference Between a Payday Loan and a Logbook Loan Reviewed by Momizat on . If you’re feeling the pinch around Christmas, Birthdays or any other special event then it might be time to look into a quick cash injection. With payday loan a If you’re feeling the pinch around Christmas, Birthdays or any other special event then it might be time to look into a quick cash injection. With payday loan a Rating: 0
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The Difference Between a Payday Loan and a Logbook Loan

If you’re feeling the pinch around Christmas, Birthdays or any other special event then it might be time to look into a quick cash injection. With payday loan ads becoming a more frequent sight on our televisions it may feel like this is the only option available to you. Another option is a logbook loan. These two may sound very similar, however there are differences you should be aware of. So, let’s take a look at the big differences between a payday loan and a logbook loan.

How a Payday Loan Works

A payday loan is a short term lending of money that is designed to keep you going until your next payday. Companies that offer this service include quickquid.co.uk, paydaybank and payday loan. Some companies offer agreements in which you pay it off over an extended period of time, instead of in one payment on your next pay check. An example of this type of payday loan company is wonga.com.

The appeal of payday loans is their immediacy. Often after applying you will have the money in your account within 24 hours of your application being accepted. Then, whenever your agreed payday comes around, the money is taken from your account as well as the interest. An example interest charge for a payday loan is about £25 for every £100 borrowed. Perhaps one of the most recognizable elements of payday loans are their high advertised interest rates (APRs) which typically come in at about 1,750%. Other things to consider with payday loans are their lack of transparency when talking about interest rates, poorly carried out affordability assessments, the use of payment rollovers and an unfair approach to struggling customers.

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How a Logbook Loan Works

A logbook loan is an amount of money paid off over an agreed period of time. Money is borrowed against the value of your car so that you can borrow money responsibly. In order to qualify for this type of loan your vehicle must be less than ten years old, unless it is a prestigious or classic car, you must be able to demonstrate regular income, your vehicle must be taxed and insured with a valid MOT certificate, your vehicle must be clear or almost clear of finance and the logbook (V5) must be in your name. Logbook loans allow you to borrow up to 70% of the value of your car, so this can mean anything between £500 and £50,000.

Logbook loans are also fast to process with money landing in your account as quickly as 2 hours after application. As you are using your car as security there is a chance that your car will be taken away if payments aren’t met. However, responsible lenders assess their client’s income and ability to pay back and then make an informed decision.

In Summary

So the biggest difference is the collateral that you loan is pitted against. Whilst a payday loan risks practically all of your possessions, if payments aren’t met, a logbook loan only risks your car. Ultimately the decision to use either service should be taken with an awareness of the risk involved.

About The Author

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Muhammad Aamir is an avid learner and online marketing consulting. Including guest blogger, blog posts sailing and link building. Social Profiles: Twitter, Facebook, Google Plus Contact: muhammadaamir2013@gmail.com

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