When looking for a loan, one of the best ways to work out whether you’re getting the best deal, as well as to find out more about the loans market, is to consult a comparison website.
It’s easy to compare guarantor loans based on price (tied to the annual percentage rates, or APR) and the amount you can borrow. It’s a little more difficult to compare companies based on their other merits (like customer service, collections policy and early repayment fees) in this way. Due to this, you should do some additional research before applying for the first loan you see.
You may know someone who has taken out a loan recently, or you may be interested in a credit product that you’ve seen advertised on TV. Although we’d like to say that logbook loans are the best option for you, it’s important to investigate all avenues before making a final decision. We’ve compared logbook loans to guarantor loans, which should help you to get a better idea of what is more suitable for your needs.
Logbook loans are, again, aimed at those who may not be able to get finance through more mainstream lenders like the banks. The main difference between logbook loans and guarantor loans is that logbook loans are secured (in this case, on your car), whereas guarantor loans are unsecured. This means that, should you default on the repayments for the loan, the lender would have the power to seize your vehicle so that they can recoup their costs.
Instead, guarantor loans use the guarantor as a ‘back up’ for the money owed; if you default on the payments, your guarantor would be asked to step in and pay the instalment on your behalf.
Logbook loan lenders tend not to check credit scores before lending, which means that the loan rests purely on the value of your car. As it’s not recorded on a credit file, you can’t build up a good credit record by managing the loan well. With a guarantor loan, your credit history will see improvements as long as you keep up with your repayments.