This article is explores the key differences between the two types of loan, Logbook loans & guarantor loans.
What is A Guarantor Loan?
A Guarantor loan is a loan agreement where there must be a “guarantor” present, a guarantor is someone who guarantees the payments in the event that the person commissioning the loan cannot make those repayments, if the person who commissioned the loan cannot make the repayments, then the guarantor must make the repayments in place of the person who has the loan credited to them.
Key Advantages Of Guarantor Loans:
Much lower interest rates than with payday & logbook loans
Cash can be paid out to the customer quickly, minimising waiting periods
Can borrow up to £10,000 which makes the loan more versatile than smaller loans for smaller sums of money
Key Disadvantages of Guarantor Loans:
- You will need a guarantor, these are not always easy for people to find because the guarantor must trust you enough to guarantee the loan for you.
- With the maximal loan value being usually up to £10,000, this might make life awkward if you require more cash than this
- Many Lenders require that the guarantor be a tenant, and/or have a good credit rating to be approved.
What Are Logbook Loans?
Logbook loans are loans that have a vehicle secured against them as collateral, More information about this is available at the logbook loans place homepage.
Key Advantages Of Logbook Loans:
- With logbook loans, you can borrow (in most cases) up to £50,000 provided there is sufficient value in your vehicle for that amount of money
- Loans can be administered quite quickly, making cash available soon (usually in about 7 days)
- Long term repayment options are available to qualifying customers
Key Disadvantages Of Logbook Loans:
- High rate of interest on the loan, despite the loan being secured against a vehicle
- There will need to be a qualifying vehicle of sufficient value for the loan to be approved and commissioned to the customer
- A vehicle can be repossessed as a last resort if the customer defaults on the loan and does not make the repayments
In summary to the above, both guarantor and logbook loans have both advantages and disadvantage, the key for any potential customers when trying to determine which loan is best, is to look at both the advantages and disadvantages, and the terms surrounding both loan types and see which one meets your needs the best.
Another thing to take into consideration, is the fact that there are different available balances you can apply for on both loans types, so if you need less money for example, and do not feel comfortable in putting forward your car as security for the loan, and can also find a suitable guarantor, then perhaps that would be a more suitable loan.
With logbook finance, the aim is to cater for potential customers, who want quick loans (usually up to £50,000) who are willing and prepared to put their vehicle forward as collateral in order to secure the finance that they wish to apply for.
Consider your options carefully before entering into a loan arrangement.