Comparing logbook loans to other loan options

Logbook loans are becoming more and more popular throughout the United Kingdom. There are a number of reasons for this, none more so than the fact that it often only takes 24 hours to secure one. This makes it very popular in times of emergencies.

That said, there are many other loan products out there. In this blog article, we will take a look at all the options available and compare them to logbook loans.

Logbook loans

These are designed for people with bad credit records but who have a vehicle that can act as collateral. Here, the loan company will take control of your vehicle logbook or V5 document during the duration of the loan. This means that they are effectively the owner of the vehicle, although you will still be able to use it. Should you default on payments, the vehicle can be sold to recoup costs. Loan amounts are based on the condition and mileage of the vehicle. The representative APR rate for logbook loans are normally around the 400% range.

Homeowner’s loan

If you own a house, this loan might be for you. Again, your asset, in this case your house, acts as collateral. Obviously, because houses have far more value than a vehicle, the amount loaned can be increased significantly, often to as much as around £200,000. Note that the financial institution providing the loan will not always give the maximum amount. They need to take into account your monthly income to ensure you can pay back the installments easily. Repayment times also vary and are for far longer periods, sometimes between 3 to 25 years. Interest rates linked to a homeowner’s loan normally are between 5% to 75.

Guarantor loans

This loan is aimed at people who do not have any form of assets to act as collateral. These unsecured loans will require the co-signature of a guarantor. If the loanee does not make their payments, the onus falls on the guarantor to do so. Again, this is a great loan product for people who have fairly bad credit ratings. This is because the guarantor gives the loan company another form of security. Guarantor loans tend to be for amounts between £500 up to £7,500 and repayment terms are anything from 12 to 36 months. Guarantor loans are one of the cheapest loan options in terms of APR rate. It comes in at around 50% in this regard. One of the major drawbacks however, is finding a guarantor. Often people are too embarrassed asking someone to co-sign for them or they cannot find someone who will agree to act as a guarantor.

Payday loans

Lastly, payday loans offer another way to secure money in a hurry and especially if you have a bad credit rating. These unsecured loans allow the loanee to borrow between £100 up to £1,000 but this needs to be paid back within 28 days. Payday loans are some of the most expensive on the market with a representative APR of around 1000%.