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Mar 20

Why is a car log book loan a much better option than a pay day loan?

Posted by:AutoMoney

When you compare borrowing in the UK now with ten years ago you see a very different picture. Back then, traditional methods of lending – such as bank loans – were the most popular way of borrowing cash. However, nowadays newer and unconventional methods have come to the fore. Two of the main options are a pay day loan or car log book loan. This post reveals why the latter option may be the best one to go for when trying to decide between the two.

Before revealing the reasons why a log book loan is better, it is first important to establish what each type of loan is. A car log book loan is one that is secured against your vehicle. You will usually be allowed to borrow seven tenths of your car’s worth. You still get to keep your vehicle, but if you fail to make the repayments, the lender has the right to take it. On the other hand, a pay day loan is a short term solution to tide you over for a couple of weeks until pay day, this is not a secured loan.

So, why does a log book loan offer a better solution than a pay day loan? First and foremost, you will usually be able to borrow a greater sum of money. Pay day lenders typically offer sums of £100 or £200, whereas log book loan lenders can lend up to as much as £5,000 and sometimes even more. In addition to this, it is also worth considering how much money you will end up paying back when simply borrowing a small sum of cash if you opt for a pay day loan. In general, interest rates tend to be extremely high and this is why a lot of people end up in a worse situation than they were to begin with.

The final factor you should consider is that you will have a longer period of time to pay your money back if you go for a car log book loan. You can find log book loans of a six month period, or a year, or sometimes even longer. As mentioned, you typically only get a few weeks if you go for a pay day loan. Unless you are one hundred per cent certain you will have the money you need within this time period, you can end up digging a massive hole for yourself.
 

Summary – There are lots of different ways to borrow money in the present day. This post reveals why a car log book loan is a better solution than a pay day loan.

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350.5%APR Representative
Representative example: Loan amount £1000. Duration 18 months. Repayable by 16 monthly repayments of £170.42 and one of £198.42 (includes Bill of Sale registration fee of £28) commencing two months from the date of the loan. Total amount repayable £2925.14. Rate of interest 187% per annum fixed. Representative 350.5%APR. LOANS ARE SECURED ON YOUR CAR. The vehicle may be repossessed if you do not keep up the repayments.