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Logbook Loans and Payday Loans - Whats The Difference

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Borrow between £250 and £50,000 and choose to spread the cost of your loan over 12 - 60 Months with easy to manage instalments.
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Logbook Loans and Payday Loans - Whats The Difference

Finding the right loan for you is difficult, especially with so many different options on the market. To help you out, we've taken a look at two of the most popular forms: logbook loans and payday loans. For both we have broken down what they are, what you get and the pros and cons, highlighting the difference for you.

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Logbook Loans

You can read more about logbook loans here:

Logbook Loans

How to Get a Logbook Loan Without Being Scammed

Pros and Cons of Logbook Loans

Pros Cons
You can borrow anywhere between £500 and They are not available in Scotland
Available on the internet and high street, so easily accessible The amount you can borrow is restricted by the value of your vehicle
You are allowed to complete repayment early, should you wish Some lenders will only give you half the value of your car
The loan is typically paid directly into your bank account With APRs as high as 400%, the loan is expensive
There are certain legal requirements for the lender to take temporary ownership of your vehicle, giving you some security If you fail to repay the loan, you lose your vehicle
It is possible to take advantage of a quick cash service, if you need the money urgently To confirm your Bill of Sale is registered, you are required to pay an additional fee
You may only have to pay the interest whilst you are paying the original loan amount

Payday Loans

Here's an example of a payday loan would work:

  1. You borrow £300 over the course of one month, with an APR of 1,500%
  2. The initial interest you will be required to pay is £77.98
  3. At the end of the month, you repay the £300 and the £77.98 - a total amount of £377.98
  4. If you pay 30 days late, you will incur an additional interest fee (£77.98), a late fee (£15) and interest on the fee (£3.60) - a total amount of £474.56

The later you make the repayment, the high the interest will be. You will also have to pay additional late fees and fee interest, which can result in the repayment spiralling out of control.

There is an overall cap process in place, which means will never pay back more than double the amount you initially borrowed.

Pros and Cons of Payday Loans

Pros Cons
They have a quick turnaround time from application to receipt of the loan, so are useful when you need cash urgently Most lenders insist that you set up a direct debit for repayment, which can cause issues if you don't have enough money in your account or forget to cancel it after repayment is complete
There is a cap on the amount you can be charged during repayment With a minimum APR of 1,500%, payday loans are expensive
They are quick and easy to apply for online Payday loans usually end up costing more to use than a credit card
They are monitored by the FCA, giving you some security Payday loans can affect your ability to get a mortgage
If you don't have enough money in your account during the repayment process, you will also be subject to bank charges

Things to Consider

For any kind of personal loan to take out, you should consider the following before signing up:

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