It can be fairly common for people to move over from Payday loans to Logbook Loans when they realise that they want to keep them longer than a few weeks. This makes complete sense because most logbook loans allow for a period of generally up to 24 months for the loan to be paid off.
The longer the period of time the loan is to be paid off for, the more interest the customer will pay. Most logbook loans companies do have far higher interest rates than high street lenders, so there is really no comparison between the two. Some lenders are cheaper than others and in fact check interest rates often to make sure they are the cheapest on the market.
Payday loan companies capitalise on the fact that people need cash fast and that they don’t worry to much about the interest rate they are paying. When it comes to needing a loan for the longer term, it can be useful to go for a logbook loan because a payday loan becomes extremely expensive. Many Payday loans are in the thousands of percent APR, whereas logbook loans can be in the low hundreds. This makes a significant difference to the amount of interest a customer will pay on a loan.
Whether it is best to take out a loan against your car over the long term depends on how long the loan is needed for. The longer period the loan is needed, the better a logbook loan is. If someone only needs money for a matter of days and weeks then a Payday loan is probably the best option.
When a vehicle is being used as security on a loan it is less risk for a company to lend money over a longer period of time. Payday loans generally don’t have any security attached to them and so can be riskier for a lender.
Whatever the type of loan, any customer needs to conduct their own due diligence before they take out a loan. If they want to go for the cheapest loan it means finding the lowest cost deal in the first place. This takes some research and not going for the first lender that offers them a loan.