When deciding to take out a payday loan or a logbook loan, there are a number of things you need to consider. What follows are detailed explanations of each type of loan and their advantages.
What is a Payday Loan?
Firstly, a payday loan is also known as a paycheck advance, which is a short-term loan that covers the borrower’s monthly costs until he or she receives the next paycheck. This kind of loan is basically a cash advance to see you through until the end of the month when you get remunerated. However, in order to take out this kind of loan you need to show your employment records and pay slips. The borrower would need to pay a certain rate on the payday loan and this rate can differ significantly depending on the company.
How do Payday Loans Work?
When taking out a payday loan the lender gives the borrower a short-term unsecured loan which then needs to be repaid at the end of the month when the borrow gets his or her salary. Most payday loans can be borrowed for two weeks at a time although some companies do offer different loan periods depending on the requirements of the person borrowing the money. However, payday loans are mostly short-term loans.
Advantages of Payday Loans
- Some lenders do not ask for verification (in the form of income statements, employee pay slips etc.) when taking out a payday loan.
- Payday loans are great as an emergency back-up when you’re in need of a bit of extra cash before the end of the month.
- Payday loans are very easy and quick to obtain. You only need to have some form of income and an active bank account to obtain your loan amount. In fact, most companies make the money available to you within 24 hours.
- Payday loans are ideal for those who do not have access to savings or investments and who are in need of a quick financial solution.
- Payday loans are also useful for those who need emergency money and this type of loan is perfect for those unforeseen circumstances that we all experience in life.
What is a Logbook Loan?
A logbook loan is when you as a borrower are able to secure loans against your car. Most companies offer up to seventy percent of the trade value of your motor vehicle and all you need to do is make sure you have your car’s logbook, hence the name ‘logbook loan’. Additionally, you are able to take up a logbook loan over a period that suits your needs as a borrower and not for only two weeks as with a payday loan.
Advantages of Logbook Loans
- Obtaining logbook loans online is extremely easy and quick to do. There are no hassles that you may experience with taking out a loan at the bank. In fact, logbook loan applications can be completed in approximately ten minutes and you can get your money almost instantly.
- You only need to show proof of your income, proof that you are the owner of the vehicle and that the car is paid up in full.
- These loans against your car can be taken for a much longer period of time than with payday loans. Logbook loans can be taken over six, twelve, eighteen or even twenty-four months, ensuring you have sufficient time in which to pay back the loan.
- When taking out a logbook loan no credit checks are necessary. This speeds up the process and also allows for those with a poor credit history to quickly obtain a loan.