If you’re finding yourself in financial difficulty and cannot make ends meet with your bills or rent, you might find yourself looking to borrow money. Unless you have an impeccable credit score, it can be hard to get financial help from traditional lenders such as banks or peer-to-peer lenders with low interest rates. That doesn’t necessarily mean that you have no options available. Payday lenders and Logbook loan providers, such as Auto Advance, can sometimes be a good option if your credit score isn’t up to scratch, but what are the differences?
Logbook loans are loans secured against your vehicle. As long as you have a car or bike that isn’t on monthly finance payments, you can apply for one of these loans. Like most other lenders, when you apply you will be subject to a credit check, but as the funds are secured against your vehicle most lenders are willing to look past any blemishes on your record. The downside of this is that if you cannot meet monthly payments then you are at risk of losing the vehicle your loan was secured against.
One benefit of a logbook loan over a payday is that, as the term of the loan is usually longer, the interest is lower. It also allows you to borrow bigger amounts if you need the money for something like home improvements or a holiday. But as you need to have the value of your car assessed it can be a more lengthy process before you have access to the money.
Payday loans often receive negative coverage in the media, and sometimes rightly so, but in recent years they have been encouraged to clean up their act. Recent restrictions and rules mean that, while applying for a payday loan is very easy, they have to be stricter on who they lend to. Proper checks are now in place to ensure that you can repay the loan you are taking out with them and if you fall behind with payments, they cannot collect the money from you as aggressively as they used to.
As previously mentioned, applying for a payday loan is easier than a logbook loan. All you need to do is fill out your details online and some companies can send you the money instantly. This can also mean that these loans are too accessible and you must fully consider whether you can afford repayments. Once you sign the contract and receive the money, there is no going back. Payday loans also have higher interest rates than a logbook loan so are a more expensive way to borrow.