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Logbook Loans vs. Payday Loans

Two of the most popular loan options for people with bad credit are logbook loans and payday loans. But between the two, which one is better and suitable for your needs? To find, comparing what and how each type works is necessary.

Payday Loans

Payday loans are unsecured short term loans that offer loans from 100 up to 1000. Since the amount is small, the term is also shorter. The typical loan repayment term is 30 days but some lenders allow up to 3 months or longer.

In terms of interest rate, payday loans come with a whopping 1000% Representative APR on average but it can go higher depending on your lender.

Logbook Loans

Logbook loans, on one hand, are secured loans which mean it requires an asset to serve as collateral. In this case, it's your vehicle which puts it at risk for repossession is repayment is delayed or missed for several months.

Because the loan is secured, the amount is larger usually starting from 500 up to 25,000 depending on the value of your car. It follows that the term is also longer generally from 3 months up to 3 years.

With respect to the cost, the APR for logbook loans is only at 400% on average. This means that logbook loans are less costly in the long run.