The Difference Between Logbook Loans and Payday Loans
Spending five minutes online will reveal a massive number of no credit check loans available in the UK. The two most popular are logbook loans and payday loans. There are some differences between them but there are also a few similarities that will be dealt with first.
Both forms of no credit check loan appeal to people who have very bad credit and/or have been refused by other mainstream lenders in the past. Most payday loans companies and all logbook loans companies provide loans for people with bad credit. This makes them a popular option for borrowers refused credit elsewhere, and may often indeed be the only credit available to them due to their financial history. Both types of loan have higher APR rates than the high street lenders, which is due to the fact that they are taking a greater risk when dealing with people with bad credit and this risk is reflected in the interest rates they are prepared to give all borrowers.
Both logbook and payday both also have a bit of a poor reputation, especially among non customers, probably due to the fact that they are outside the mainstream lending industry, and are often categorized along with loan sharks and pawnbrokers. There have been various moves in both industries recently to clean up the image they project. For example the Consumer Credit Trade Association (CCTA) has a new code of practice for logbook loans lenders which most companies have already signed up for.
Overall then, these two types of no credit check loan appear similar but there are a few big differences that may make some potential borrowers move from one loan to the other.
1. Log book loans are secured on your vehicle. They are often call car secured loans for this very reason. A car being used as collateral means that if someone fails to repay the loan then their car may be at risk. Payday loans on the other hand are unsecured loans, where the borrower need only demonstrate that they have a regular income i.e. a job.
2. You can borrow larger amounts of money with logbook loans UK companies. Whereas payday loans are usually limited to under £1000 at a time, log book loans can be up to £50,000 if the value of the vehicle used as security is particularly high, for example a classic or prestige car. This appeals to a similar demographic that uses sports cars and diamonds as collateral in pawn shops for astronomical amounts of money.
3. A payday loan is taken out for a month at a time, hence its name “payday”. Although these loans can be rolled over into the next month, it is only with logbook loans that borrowers start with a longer term repayment period, for example 12 to 18 months.
4. There are often much lower APR rates with log book loans because the car is security on the loan and because the loan repayment rate is longer. For example at the time of writing one logbook loans lender has an APR of approximately 100% LESS than typical payday loans lenders.
Reference:
Personal loan in Malaysia
Both forms of no credit check loan appeal to people who have very bad credit and/or have been refused by other mainstream lenders in the past. Most payday loans companies and all logbook loans companies provide loans for people with bad credit. This makes them a popular option for borrowers refused credit elsewhere, and may often indeed be the only credit available to them due to their financial history. Both types of loan have higher APR rates than the high street lenders, which is due to the fact that they are taking a greater risk when dealing with people with bad credit and this risk is reflected in the interest rates they are prepared to give all borrowers.
Both logbook and payday both also have a bit of a poor reputation, especially among non customers, probably due to the fact that they are outside the mainstream lending industry, and are often categorized along with loan sharks and pawnbrokers. There have been various moves in both industries recently to clean up the image they project. For example the Consumer Credit Trade Association (CCTA) has a new code of practice for logbook loans lenders which most companies have already signed up for.
Overall then, these two types of no credit check loan appear similar but there are a few big differences that may make some potential borrowers move from one loan to the other.
1. Log book loans are secured on your vehicle. They are often call car secured loans for this very reason. A car being used as collateral means that if someone fails to repay the loan then their car may be at risk. Payday loans on the other hand are unsecured loans, where the borrower need only demonstrate that they have a regular income i.e. a job.
2. You can borrow larger amounts of money with logbook loans UK companies. Whereas payday loans are usually limited to under £1000 at a time, log book loans can be up to £50,000 if the value of the vehicle used as security is particularly high, for example a classic or prestige car. This appeals to a similar demographic that uses sports cars and diamonds as collateral in pawn shops for astronomical amounts of money.
3. A payday loan is taken out for a month at a time, hence its name “payday”. Although these loans can be rolled over into the next month, it is only with logbook loans that borrowers start with a longer term repayment period, for example 12 to 18 months.
4. There are often much lower APR rates with log book loans because the car is security on the loan and because the loan repayment rate is longer. For example at the time of writing one logbook loans lender has an APR of approximately 100% LESS than typical payday loans lenders.
Reference:
Personal loan in Malaysia
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