Logbook Loans vs. Payday Loans

If you have bad credit and you’re looking at bad credit loan options, there are two most popular loan products available in the market—logbook loans and payday loans. Both loan products offer quick cash even if you have a poor credit score. Approval is quick, requirements are minimal and it’s a handy option if you’ve been rejected for a personal loan from major lenders.

If you’re choosing between the two loan products, which one is better? How do you know if a logbook loan or a payday loan is best suited for your financial needs? In order to answer these questions, we need to compare and contrast the two financial products.

What are payday loans?

Payday loans are unsecured loans with loan offers from £100 up to £1000. Approval is super fast usually within a few hours after you applied. The repayment period is 28 days or on your next pay check. It is often advertised with a representative APR of 1,000%. To know more about payday loans including its risks, head over to Investopedia.

What are logbook loans?

Logbook loans, on one hand, are a type of secured personal loan, which means you need collateral. In this case, you need a vehicle to secure your loan against. With the security requirement, you can borrow between £500 and £25,000, considerable more than what payday loans can offer. The average representative APR for logbook loans is 400%.

Which one is better?

Payday loans and logbook loans, as you can see are two different types of bad credit loans. Payday loans are unsecured with lower loan offers making it an ideal option for small financial emergencies. If you need a large loan amount, however, you may be better off applying for a logbook loan instead.

One can’t really say payday loans are better than logbook loans and vice versa. It will depend on your financial situation and need. In any case, the most important thing to remember when taking out a loan is to borrow only what you can afford.