Payday loans and logbook loans are
both loan types that are growing in popularity, yet not many people fully
understand exactly how they work. The object of this article is to explain the
differences between the two types of loans so you can make an informed decision
when deciding which one is best for you. They each have their merits and they
also each have their pitfalls. I will start with a brief description of what
each loan is and who can apply for them, and then move onto a comparison
between the two.
Payday Loans
Payday loans also sometimes known as
pay day loans or pay check loans are very short-term unsecured loans. They have
come about as a stop-gap type of finance that is designed to help people
overcome a short-term financial issue with a small injection of cash until
their next payday. They can be taken out for sums of money from £85 to £750 and
the cash can be paid into your bank on the same day that you apply. The
application process is very simple with most of the lenders offering a simple
online application form with an instant decision. Although not all lenders
carry out a credit check as part of the application process some lenders have
now started doing so. In order to qualify you will need to be a UK resident
aged 18 or above, you will also need to be employed and earning at least £750
per month, with your salary being paid direct in to your bank account. The bank
account will also need a debit card attached to it.
Logbook Loans
A logbook loan is a type of secured
loan, but instead of the loan being secured on your home it is secured on your
car logbook or vehicle registration document. This type of loan can be taken
out for larger amounts of money up to £50,000 if your car is worth enough, and
the repayments spread over longer repayment terms. To qualify for a logbook
loan you will also need to be a resident of England or Wales and aged at least
18 years old. You must also own your car that is free from finance, and be able
to afford the repayments. This type of loan can be taken out no matter what
your credit history and there is no credit check required as part of the
application process. The application process is in two parts for a logbook
loan, starting with a telephone call or by completing an online application.
Once the lender has received your application, they will call you back to
arrange for you to bring your car and its logbook to the lenders nearest branch
so they can inspect the car and put a value on it. They will then tell you how
much they are prepared to offer and calculate your repayments. Assuming you are
happy with the quote you will need to show them proof of your income and sign
some documents, leave your logbook with them and your loan will get paid out.
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