Why is a log book loan better than a payday loan?
At Guarantor Loan Comparison, we believe it is important to know what other options are available when it comes to short term finance.
When you need money in a hurry, there are plenty of ways to get it. But fast cash usually comes at a cost, which is why you should do some proper research before signing any loan agreement. Both payday and log book loans are popular choices to deliver cash when you need it, but why is a log book loan better for you than a payday loan?
Payday loans are a simple way to get a sum of cash quickly, whether to pay for an unexpected repair or expense, or just to see you through until your next payday. Because they’re designed as a short term fix to help you out, the high interest charged could pave the way for more problems in the future.
Another way to get a quick loan just as easily, is to apply for a log book loan. Using your car as security on the loan, log book loans are often seen as a more attractive, safer alternative. But just why is a log book loan better than a payday loan?
A potential for high penalties and charges
When you apply for any type of loan, don’t get sidetracked with how much you’re able to borrow. It’s essential to look at the long term, bigger picture. And that means seeing how long the loan will take to repay and how much it will cost you overall.
Though payday loans are designed to be paid off quickly (usually within 30 days), the APR interest – typically anywhere between 400% and 1500% or more – means you can be paying back a lot more than you initially borrowed. Any other big or unexpected expenses the following month mean you could incur late payment penalties and additional charges which will see your payments increase.
With a log book loan, your payments are agreed upfront, as well as the repayment schedule, so you know exactly where you stand before and during your loan. And, because the loan is secured against your vehicle, it means there’s a chance you won’t need to undergo a credit check, unlike many payday loan lenders. All these things make for a safer loan option, giving you peace of mind.
The low cost and low impact option
As one of the UK’s leading log book loan lenders, Car Cash Point know exactly why a log book loan is better than a payday loan. For a start, they have flexible repayment terms. These are either weekly, fortnightly, four-weekly or monthly to suit your own income making repayments as easy as possible.
They also have a low, fixed rate of APR interest of 230.70%. And, there are no hidden charges to worry about. Any penalties you might incur are brought to your attention before you sign, so you always know exactly what you’ll be paying back.
Plus, there are no credit checks. So if you’ve struggled with credit in the past or have had any issues, Car Cash Point should still be able to help you. Together with no penalties for making overpayments, or even paying off your loan early, it all adds up to a genuinely low-cost and low impact loan option.
Logbook Loans Compared To Payday Loans – 10 helpful tips
When it comes to comparing two heavyweights of quick and easy instant loans, it might be easy to assume which one will deliver the ‘best deal’ knockout blow. But don’t be too quick to make a judgement. When you’re looking at logbook loans compared to paydays loans, here are 10 tips to help you make the best choice.
Personal choice and circumstance are two big factors in deciding which loan will suit you best. But by looking at the pros and cons, you’ll be able to make a choice that works for you and your finances. And you might be surprised at the results!
1). Look at the bigger picture
When you need cash quickly, it’s easy to get carried away and sign up to something that might not be the best deal for you. But it pays to take a bit of time to make yourself aware of the facts of the loan and the lender, before you sign the dotted line. In a nutshell, take a look at the bigger picture including how much the loan will cost you overall.
2). Check the interest rate
A logbook loan means you’ll pay the loan back over a longer period. This generates a much lower APR interest rate for you to deal with which means lower payments. A high interest payday loan is designed to be paid back quickly, and in full, on your next payday, resulting in a much higher payment.
3). Check the repayment length
Payday loans are designed to be paid back in full when you next get paid. But it could take longer to pay it off all in one go if you have any unexpected additional expenses during the month. Logbook loan repayments, though longer, will give you more structure, so you know exactly how long you’ll be paying back your loan.
4). Check your payments
As you know by now, taking a payday loan means you should be able to pay the debt off all in one go after a month. Logbook loans offer different payment levels to go with your repayment length, to help you budget better according to how frequently you get paid. That way, you know exactly how much you’re paying every time.
5). Check the T&Cs
Many payday loan companies try to bury the bad news deep within their small print. Always make sure you know the facts of your loan before you sign so there are no nasty surprises you haven’t been made aware of. Ethical logbook loan lenders like Car Cash Point will always make you aware of any fees or charges you might incur.
6). Can you make overpayments?
A Car Cash Point logbook loan doesn’t need to be as precise as when it’s agreed. Should you find yourself with a bit extra in your pay packet, you can make overpayments to help you reduce the loan as well as the interest. Payday loans don’t offer overpayments, so the loan will last as long as it takes to pay back.
7). Can you pay off your loan early?
Once you sign up to a payday loan, they’ll attempt to recover the payment and the interest directly from your bank account when you get paid. With a Car Cash Point logbook loan, even though it’s agreed for a longer period, you’re welcome to pay your loan off at anytime when you have the funds to do so.
8). Any hidden charges?
Many payday loan lenders like to hide their fees and charges, so you could get stung for excessive extras if you can’t make a payment. With a Car Cash Point logbook loan, you’re always made aware of any fees and charges that you could face at the time of application. So you know just how much you’ll add to your loan amount if something unexpected happens.
9). Are you creditworthy?
Most payday loan lenders rely on credit checks to make sure you’re able to pay your loan back. That just makes it hard to get a payday loan in the first place. At Car Cash Point, there are no credit checks required. So if you’ve had credit problems in the past, you should still be able to get the loan you need.
10). Choose a logbook loan lender who cares
Looking through this list of logbook loans compared to payday loans, it highlights the differences between the high-risk/short-term, and the low-risk/long-term options available to you. If money is tight, you probably won’t want the the high-risk payday loan.
Opting for a low-cost logbook loan from a trusted lender like Car Cash Point, can give you much more freedom and flexibility in the long run.
For more information about a logbook loan with Car Cash Point, call their expert loan advisors today on 0333 222 3489.