With the recent economic turmoil in the world, it’s little surprise that many people are struggling to find ways to get cash-in-hand quickly. For this, short-term loans have often fitted the bill perfectly.
But as many banks have also been hit by the recession, they are increasingly wary of lending to consumers. As a result individuals are forced to seek alternative means for a cash loan.
A market that cropped up to meet this need was the payday loan scheme. However, those that examine the terms and conditions of such loans carefully may in fact notice that a logbook loan is more suited to their needs, and comes with lower risks than a payday loan.
What is a Logbook Loan?
A logbook loan is a loan granted against your vehicle’s V5 document or “Logbook”. It is an easy method of loan as they do not check credit history. It is generally approved within a day and requires very less paperwork. Though it has a requirement, ie. the vehicle should be finance free and should not be more than 12 -13 years old. Still, it is considered as a better alternative to Payday Loans because of low interest rates and flexible repayment options.
Here’s a few reasons that a logbook loan may be the more suitable option:
1. Interest rates are significantly reduced.
Although payday loans may seem a quick-fix for cash in hand loan, many individuals fail to consider the high interest rates that such loans come with.
Payday loans can sometimes come with APRs topping 4,000%, leaving borrowers paying back a substantially larger sum than they originally borrowed. It does little to help your cash flow stabilize, which is what loans are intended to do! If you don’t repay it quickly, you may find yourself facing a potentially debilitating debt.
Logbook loans however, are secured against the worth of the borrower’s car, which generally means that the APRs are far less, meaning it’s a more manageable debt and easier to pay back.
2. Potential for larger sums in loans
While payday loans may hold an appeal in that they require virtually no collateral, leaving it as a no-strings attached type loan, if you already own a vehicle you have a high-value asset in your possession. This asset can be used to help obtain a logbook loan, which then in turn gives you access to a greater potential sum to loan.
Although it depends on the value of your vehicle, logbook lenders may offer loans ranging from £200 up to £25,000. It doesn’t matter if you are considered to be self-employed, or if you have a less than stellar credit record. Your car is generally the second most valuable asset you would own, and you can make that asset work harder for you in securing a log book loan.
3. Loan periods are more easily managed
Payday loans are designed to be a quick-fix, that is a short-term solution. What that means, is you’ll have to repay the loan within a relatively short period of time. If the borrower cannot secure the funds to repay the loan, the interest quickly builds up. This leaves borrowers at times forced to take out a second loan merely to repay the first loan!
Lenders offering logbook loans however, can set it up so that you can repay the debt over a far greater time period, anywhere from half a year up to three. In addition, borrowers can sort out a repayment plan to match their cash-flow needs, which guarantees you can pay back your debt in a timely and stress free fashion.